Hong Kong continues to rank as the world’s most expensive global retail market, recording prime rents nearly 150 percent higher than New York and more than 400 percent higher than London and Paris, according to new research from global property advisor CBRE Group.
CBRE’s quarterlysurvey (Q1 2013), which tracks the top 10 most expensive prime global retail markets, reveals that strong demand from international retailers, coupled with a modest supply pipeline, has lead to record-high prime rental rates. Leading the pack, Hong Kong continues to rank in a rental class distinctly above its global peers, recording prime rates during Q1 2013 at €36,351per sq m per annum.
While markets such as Hong Kong, New York, London and Paris did not record increases in prime rents this quarter, these cities have exhibited resilience due to international retailers continued longer-term strategic expansion strategies which feature a distinct preference for prime space in the best locations in these markets.
Ranking as the second most expensive global retail market, New York City (€24,944per sq m per annum) welcomed several new national and global retailers in 2012 that were attracted by the market’s strong international tourism features. The pipeline for new retail space in New York is low. However, a significant amount of supply is available along Fifth Avenue between 49th and 59th Street.
Europe’s prime retail markets of London (€8,843per sq m per annum)and Paris (€8,820per sq m per annum) are holding steady largely due to scarcity of supply and correspondingly high prime rent levels. As witnessed in Hong Kong, many new retailers to the Central London market have been forced to consider alternative locations. This is most apparent on Bond Street, where retailers have looked to alternative locations in Mayfair. Examples include the fashion retailer Oscar de la Renta, which has now opened a 185 sq m store on Mount Street, with Celine also taking a 740 sq m unit a few doors down. The openings represent the first UK store for each.
“Contrary to global trends where despite declining economic indicators, prime retail rents have increased in the past year due to limited supply, prime rents in Budapest have remained stable at the €1020 per sq m per annum level as there have not been many new retailers entering the Hungarian market and we rather see optimilisation of operating costs that result in a slight decreasing push on even prime rents. Thus Budapest retail can easily be seen as a bargain on an even pan-European level when it comes to quality space and this creates a true opportunity for new brands to secure prime locations in a market that seems to have reached bottom and is set to rebound in the coming years, albeit slowly.” – Anita Csörgő Head of Retail at CBRE Budapest added.
Raymond Torto, Global Chief Economist, CBRE, commented: “Prime retail rents across the most expensive global markets have held firm against a backdrop of scarce supply and preference for prime space. Despite subdued retail sales growth and strained consumer sentiments, international retailers remain focused on long-term growth strategies that have resulted in store expansions across many key global markets such as New York, London and Moscow. However, at the current high levels, retailers are considering “off” prime or secondary locations and showing a reluctance to pay record high rates.”
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