Hong Kong is now hailed as the world’s second most expensive city in which to rent retail space.
According to property consultant CB Richard Ellis (CBRE), Hong Kong shop rents rose to US$1695 per square foot per year during the third quarter, closing on the world’s most expensive strip – New York’s Fifth Avenue, where the annual rate is steady at $1900.
Sydney is third at $1224, followed by London and Zurich.
Other cities in Asia to rank in the top 20 were Guangzhou (10th), Beijing (14th) and Shanghai (20th).
Hong Kong retailers are still flocking to the city despite high space rents, lured by soaring retail sales.
“In spite of the uncertain economic outlook, retailers see Asia as a growth area and are actively seeking opportunities either to establish a foothold or expand operations here,” said Edward Farrelly, head of CBRE’s Hong Kong research division.
“Hong Kong is a key destination as it has the added advantage of exposure to mainland China,” said Farrelly.
Joe Lin, director of retail services at CBRE, says the high demand for space coming from international brands is the stimulant for the rising rents in the city.
Hong Kong retail sales increased by 27.5 per cent year on year during the third quarter, and by 25.4 per cent year-to-date. The city’s visitor arrivals rose 19 per cent year on year in the third quarter which is also a contributing factor for the increased retail sales.
The booming retail industry is expected to continue in the city, pushing the influx of luxury brands and expansion of international and national brands. French company Longchamp, is renting a 7974 sqft spread over three floors at Silvercord shopping centre in Tsim Sha Tsui for HK$7.5 million per month.
“The buoyant employment situation, together with the prevailing strength of inbound tourism, continues to bode well for the retail sector in the near term,” said Farrelly.
Hong Kong retail rents is seen to remain high in the coming months, however, this will be counterbalanced with strong retail demand especially in prime locations.
GB
