New World Development Co., the Hong Kong real estate company controlled by the billionaire Cheng family, is in talks with luxury giant Louis Vuitton to open a mega store in one of the developer’s signature malls, according to people familiar with the matter.

The new store would occupy about 40,000 square feet at the K11 Musea mall, making it one of Louis Vuitton’s largest in Asia, said the people, who asked not to be identified discussing private matters. The store could feature a museum, a cafe and a lounge for the brand’s VIP customers, they said. Details over rent remain unclear. 

Discussions are at an advanced stage, but details could still change and the deal could still fall apart, the people said. 

New World didn’t immediately respond to a request for comment. A spokesperson for LVMH declined to comment.

If an agreement is reached, the expansion of fashion conglomerate LVMH’s largest brand would inject some confidence into Hong Kong’s retail industry and help its ailing commercial property sector. It would also be a boost for New World, which has been struggling with debt woes and uncertainty over its leadership. 

Located near the city’s famous Victoria Harbor and with a fashion-forward design incorporating arts and culture elements, K11 Musea is a popular destination for tourists. Its exclusive private members clubs have also attracted a group of wealthy clientele through the Cheng family’s networks. 

LVMH’s plan to open a mega store in one of Hong Kong’s most upscale shopping malls, with significant space reserved for non-retail and VIP elements, underscores luxury brands’ efforts to wring more growth from the ultra-rich at a time when China’s economic slowdown has sapped demand for discretionary consumption among middle-class shoppers. Fashion houses are designing more unique shopping experiences to develop personal connections with customers, and are focusing more on clients less affected by the downturn.

While Hong Kong has been suffering from declining retail sales and a slow recovery in tourism, the city has the highest concentration of millionaires in the Greater China region and ranked No. 9 on a list of wealthiest cities in the world, according to a report published last year by investment migration company Henley & Partners in partnership with intelligence firm New World Wealth.

K11 Musea is accelerating its pivot to luxury shopping with Prada SpA opening a new store in the mall and other high-end labels, including LVMH’s Loewe and Kering SA’s Saint Laurent and Balenciaga upgrading their facilities. The mall also hosted Louis Vuitton’s first ever fashion show in Hong Kong in 2023. 

Facing mounting pressure over its debt burden, New World has proposed pledging some of its most-prized properties valued at a total $19.1 billion, in order to refinance its loans, Bloomberg News reported earlier this year. K11 Musea, located on a site where the Cheng family has owned properties since the 1970s, is seen as a heritage asset for the clan. The family is the center of an ongoing succession saga with patriarch Henry Cheng saying he was still looking for someone to take charge of the family business.