Hong Kong loses retail rent ranking
New York’s Upper Fifth Avenue is now the world’s most expensive to rent retail space.
It has overtaken Hong Kong’s Causeway Bay in the annual Cushman & Wakefield Main Streets Across the World survey released in France this week.
On Upper Fifth Avenue, (pictured), rents rose 13.3 per cent year-on-year to a record US$3500 per square foot, while Causeway Bay rents fell 6.8 per cent to $2735.
In third spot was Champs-Élysées in Paris, where rents were static after a stunning 40 per cent rise last year, despite an overall six per cent increase in Paris.
London’s New Bond St was fourth and Sydney’s Pitt St Mall regained its place in the top five, with rents surging 25 per cent.
James Hawkey, head of retail in Asia Pacific at Cushman & Wakefield, said retailers were exercising caution in Hong Kong this year, explaining the easing of rental rates in new leases.
Sales were “moderating” and shoppers from mainland China was showing “less exuberant consumption’.
“Luxury brands were conservative, while watch and jewellery retailers notably cut back on new stores, with this sector seeing negative growth. Several leading local retailers recorded lower holiday sales,” said Hawkey.
“The beginning of the Occupy Central protest in Hong Kong since the end of September has further weakened the retail sentiment in major core retail areas, especially in Causeway Bay and Mong Kok where students [were] still blocking some major roads.”
In the Asia-Pacific region, prime rentals rose an average 3.6 per cent.
Other Asian prime retail strips to rank highly were:
- The Ginza, Tokyo, Japan – 7th
- Myeongdong, Seoul, South Korea – 8th
- Wangfujing, Beijing, China – 13th
- Orchard Rd, Singapore – 16th
- Pavilion, Kuala Lumpur, Malaysia – 21st
- ZhongXiao E. Rd, Taipei, Taiwan – 26th
- Khan Market, New Delhi, India – 31st
Globally, prime retail rents rose an average of 2.4 per cent in the 12 months to September 2014, with recovery being sustained but at an overall slower rate.
“Volatile and somewhat subdued economic activity affected some markets, while structural changes impacting on others,” the report concluded.
“However, despite a more constrained rental growth rate, 277 of the 330 locations surveyed were either static or increased over the year.”
Martin Mahmuti, a senior investment analyst at Cushman & Wakefield, said the trend for major retail brands to experiment with design, layout, content and services, as they reinvent the concept of their flagship stores, is continuing to impact on major gateway city markets and will remain a key factor influencing growth in the year ahead.
“Despite the still uncertain economic situation in some parts of the world, notably in Asia Pacific and the Eurozone, retail market activity is expected to improve in the year ahead. Premier shopping locations will remain in high demand as retailers are keen to establish a presence and raise their brand profile, but supply as ever will remain tight.
“The growth of online shopping, supporting the polarization the market in favor of the biggest and the best, will increasingly drive retailer expansion strategies whilst also having a structural impact on local markets,” he concluded.
Main Streets Across the World is recognised as the barometer for the global retail market and ranks the most expensive locations in the top 330 shopping destinations across 65 countries.