Hong Kong is the world’s most expensive destination for retailers according to new research from global property advisor CBRE Group.

Hong Kong, with retail rents at US$3864 per square foot per annum, has topped the rankings for world’s most expensive retail rents. The reason: significant and growing inbound tourist flows and growing domestic wealth fuelling increased spending on luxury goods in particular, even though growth rates have slowed in recent months.

New York is at number two position with US$2475 per square foot per annum. Both cities experienced significant increases in retail rents quarter-over-quarter.

Sydney, at US$1112 per square foot per annum, occupied the third rank, followed by Tokyo at US$1025 per square foot per annum and London at US$956 per square foot per annum.

The report focuses exclusively on each city’s top tier retail streets, the asking rents for which represent the upper limits of rents for those cities. The asking rents in the report do not represent the overall retail rental market for the cities cited.

Globally, total retail rents increased by a modest 0.8 per cent quarter-over-quarter in this year’s first quarter as concerns over the eurozone debt crisis and weak global economic growth continued to affect consumer and retailer confidence. Despite these fears, occupier demand for prime space in many major cities remained strong, and prime space was in short supply in many markets.

The Americas region led the way in the first quarter with retail rent growth of 3.4 per cent quarter-over-quarter, largely due to significant demand in a handful of US cities such as Washington DC, Miami and Seattle.

Positive quarterly growth (0.5 per cent) was also registered in Asia Pacific following strong interest from international, fashion and luxury retailers.

Europe, Middle East and Africa (EMEA) continued to be a target for many American brands, however, the region experienced significant rental declines in some markets, including Athens and Belgrade, and averaged a quarterly decline of -0.2 per cent.

“Overall, this quarter has seen more positive aspects than the last, with improved consumer spending as well as steady occupier demand and new shopping centres bringing benefits to emerging markets,” said Ray Torto, global chief economist, CBRE.

“Retailers continue to target the best locations in the more mature markets of Western Europe and the wealthier markets in the Asia Pacific region.”

GB