Why Malls Are Not Dying In HK? Real Estate Mix Hypothesis or e-Shopping Hypothesis

A. Malls are dying in the US

Since 1956, after Gruen designed the first mall, Minnesota’s Southdale Center in the US, shopping malls have become spring after the rain and can be found in every big city. A mall is usually fully enclosed and climate-controlled, with anchor stores, escalators and parking lots, etc., it is cozy and convenient, not only for shopping, but also for entertainment and social gathering or even just whiling away the time.

However, malls in the US are now facing a dying trend. More and more malls in the US are reported to be closing or changing land use. For example, a WIRED (2019) interviewed an architecture professor Ellen Dunham-Jones about why malls are dying. She contended that physical shopping is gradually being replaced by e-shopping. Yet, in contrast, malls in Hong Kong are found to be very popular, with a huge pedestrian flow rate and the businesses are very profitable. Al (2017) posited that it is because of the real estate mix.

In the US, malls are commonly standalone in a remote area with a big parking lot. People have to drive a long way just for shopping. However, malls in Hong Kong are commonly at the podium level of a large-scale development comprising Hotel, Offices, Parking, Shopping, Convention center, and Apartments, and are usually connected to a transportation hub, either a train station or a bus terminal. Such a development model is coined as HOPSCA, and is now also popular in mainland China (Al, 2019), but I prefer to call it a Real Estate Mix (RE-MIX) mimicking the tenant-mix concept in shopping mall management. (Yiu and Xu, 2009)

This hypothesis is logically plausible though, the author did not provide empirical evidence to support it. Besides, it cannot refute the e-shopping hypothesis. If people can shop easier, faster, cheaper and with a better shopping experience by e-shopping, physical shopping would not be able to survive, no matter how good the development mix is. In other words, there must be something unique in Hong Kong that e-shopping cannot be as common as in the US.

B. e-shopping in Hong Kong is not common

Hong Kong is a technologically advanced city though, it falls behind many other international cities in the electronic payment system and e-shopping engagement, but very few studies try to explore the reasons behind.

The benefits of using electronic money or cashless city are well known and straightforward. One may refer to Visa (2017) for all the benefits for households, businesses and governments. It estimates that the net benefits amounted to US$470 billion per year. However, the net impact of electronic money in Hong Kong was only 1.5% of the GDP, which was relatively low in comparison with other Digital Leaders, such as 2.9% in Helsinki. (Figure 1)

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Figure 1 Net Impact of Electronic Money as % of GDP. Source: Visa (2017) Cashless Cities

In fact, if you compare the growth rates of electronic transactions against the growth rates of payment revenue of different economies, Hong Kong was the poorest performer in 2016–17, according to Bansal et al. (2018), as shown in Figure 2 where HK is located at the Right-Hand Bottom corner.

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Figure 2 Growth Rates of Electronic Transactions against Growth Rates of Payments Revenue 2016–17. Source: Bansal et al. (2018)

It implies that even though Hong Kong had one of the highest growth rate (about 32%) in payments revenue, the growth rate in electronic transactions was relatively small (about 8%). China, in contrast, the growth rate of the electronic transaction was about 30%, when the growth rate of payments revenue was commensurate.

However, the growth rate of electronic payment of the US is similar to that of HK, if e-shopping is the reason for the death of shopping malls, then malls in the US should not be dying. It seems that the Real Estate Mix Hypothesis is more tenable in explaining the survival of shopping malls in HK.


Al, S. (2017) Hong Kong figured out how to make shopping malls a sensible part of the urban fabric. Can this model go global? CityLab, May 16. https://www.citylab.com/design/2017/05/decline-of-shopping-malls-hong-kong-design/526764/

Bansal, S., Bruno, P., Denecker, O., Goparaju, M. and Niederkom, M. (2018) Global payments 2018: A dynamic industry continues to break new ground, McKinsey&Company. https://www.mckinsey.com/~/media/McKinsey/Industries/Financial%20Services/Our%20Insights/Global%20payments%20Expansive%20growth%20targeted%20opportunities/Global-payments-map-2018.ashx

Visa (2017) https://usa.visa.com/visa-everywhere/global-impact/cashless-cities.html

WIRED (2019) Architecture Professor Explains Why Malls Are Dying, June 28. https://www.youtube.com/watch?v=sBEajQWy-LU&feature=youtu.be&list=WL&fbclid=IwAR0nZOpZjZc461CqCmmLMd_Nf87jMoqMxoidOrOTIBlAXYT7lkhPg1CZCKg

Yiu, C.Y. and Xu, S.Y.S. (2009) A Tenant Mix Model for Shopping Malls, European Journal of Marketing, 46 (3/4), 524–541. DOI: 10.2139/ssrn.1484568

ecyY is the Founder of Real Estate Development and Building Research & Information Centre REDBRIC

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