Hong Kong closes in on New York as retail rents soar
Wednesday 08 June 2011
Corrects figures, details in paragraph 5] As a shopping destination, Hong Kong has over the past decade charted a course towards the very high-end in brands - and it seems retailers are now paying a very expensive price for the trend.
With a 46 percent rise in rents, quarter on quarter, as 2010 drew to a close, Hong Kong is now second only to New York in terms of what tenants pay for retail locations across the city.
According to the latest figures released by global commercial property company CB Richard Ellis last week, Hong Kong last year surpassed Sydney as the second-most expensive city in the world, with the average cost being paid now hitting US$1,687 per square foot per year. Sydney retailers now pay US$1,301, according to CBRE.
New York still tops the charts with rents at US$1,900 - but Hong Kong seems intent on closing the gap as the world's leading brands continue to set up shop all over town.
Local media here have reported that even US casual retailer Abercrombie & Fitch has gotten in on the act and is paying HK$7.5 million (US$964,000) a month for a shop in downtown Central that's estimated to cover around 12,000 square feet. It has up until now been occupied by high-end clothing company Shanghai Tang.
In the bustling district of Causeway Bay, meanwhile, LVMH (Watch) is renting a 600 square foot space for HK$1.5 million (US$193,000) per month.
The fact that Hong Kong is the favorite shopping destination for mainland China plays a significant role in the demand for retail space here - a record 22.7 million arrived during 2010 and April saw 2.1 million cross the border.
According to a recent report from Swiss-based tax refund and shopping service provider Global Blue, more than 70 percent of outbound consumption by Chinese travelers was taken up by shopping.
Overall, retail rental rates grew 3.8 percent globally, year on year, according to CBRE.
The world's most expensive retail rents (US$/sq ft per annum)
1. (1) New York 1,900
2. (3) Hong Kong 1,697
3. (2) Sydney 1.301
4. (4) London 909
5. (6) Zurich 829
6. (5) Tokyo 807
7. (7) Paris 783
8. (8) Brisbane 753
9. (9) Moscow 721
10. (10) Melbourne 691
11. (11) Guangzhou 575
12. (12) Los Angeles 520
13. (14) Milan 500
14. (16) Munich 490
15. (13) Chicago 480
16. (15) Singapore 470
17. (17) Rome 461
18. (18) Beijing 449
19. (19) Frankfurt 442
20. (23) Shanghai 414
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