Hong Kong World's Most Expensive Retail Market
Global Retail Rents Report Finds Prime Rents Reaching Record Breaking Levels in Major Markets
February 20, 2014, Hong Kong
– Hong Kong is by far the world’s most expensive city for global
retailers while prime rents in major markets such as New York, Paris and
London continue to reach record-breaking levels, according to global
property advisor CBRE Group, Inc’s Q4 2013 Global Retail Rents report.
CBRE’s quarterly ranking of 97 prime retail
locations/markets across the globe shows that competition in the world’s
leading cities is getting even stronger. This demand is being fuelled
by high-end retailers willing to pay record rents for the most coveted
shops, while development levels are at historic lows resulting in a
shortage of prime retail space. For Asia, Hong Kong, Tokyo and Beijing
feature in the global top ten.
Hong Kong (US$4,334 per sq. ft. per annum) is
the world’s most expensive location for prime retail rents by a
substantial margin, followed by New York (US$3,300 per sq. ft. per
annum), Paris (US$1,452 per sq. ft. per annum) and London (US$1,356 per
sq. ft. per annum). Hong Kong has held this position for the past two
years.
Prime Retail Rent Ranking, Ranking by US$ per Sq. Ft. per Annum Basis
Source: CBRE Research, Q4 2013
Commenting on the three Asian centers that featured in the top ten globally, Sebastian Skiff, Executive Director, CBRE Retail
said, “Asia’s retail centers continued to grow and rents continued to
increase, with gateway cities like Hong Kong, Tokyo and Singapore
attracting retailers new to the region, and retailers established in
these centers beginning to spread into emerging markets. This is helping
to increase competition for space particularly in prime areas.”
Joe Lin, Executive Director of Retail Services, CBRE Hong Kong
said, “Prime retail in Hong Kong will continue to be in high demand
despite rents ranking highest in the world, and also the drop of
consumption expenditure on luxury goods by mainland shoppers. In Hong
Kong, we have seen an increase in interest particularly from local
jewelry and pharmacy shops looking for expansion opportunities in prime
retail locations in the city. Outside of Hong Kong, some Korean
cosmetics retailers, and international renowned mid-range brands have
been targeting Hong Kong as a new entry point in Asia. These elements
combined form a new stream of demand in the market which will help to
support on-going high rents in prime locations.”
CBRE research showed that retailer demand in
Hong Kong is focused on prime locations rather than secondary streets.
The most sought-after prime streets are Russell Street in Causeway Bay,
Canton Road in Tsim Sha Tsui, and Queen’s Road Central in Central. These
locations—which all recorded very tight vacancy—continue to attract
both global and local retailers.
“Russell Street in Causeway Bay, Hong Kong
remains the most expensive place in the world for retail rents off the
back of its very limited supply, low vacancy and availability, and the
ongoing demand for retail space,” said Mr. Lin.
“Whilst generally speaking we still see
strong demand for prime streets across Hong Kong, we are seeing rental
growth levelling off, and flat to negative in secondary streets, with
vacancies rising,” said Mr Lin. “There is likely to be
an increase in new supply for the first time in many months but not all
of this new stock will be suitable for the requirements of
international brands and retailers. In fact, less than half of the new
supply will be located in major retail districts. The majority will be
located on secondary streets that are less appealing to niche brands.”
Disclaimer:
Neither
CBRE nor its affiliated companies make any warranties or claims on the
implied accuracy of the information contained herein.
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