HK’s Causeway Bay Still 2nd for Retail Rents Globally Despite Downturn

Shops may be closing due to disappointing sales in Hong Kong’s Causeway Bay area, but the glitzy shopping street still hung onto its rank as the second-most expensive place to rent a shop in the world, behind only New York’s Fifth Avenue.

Shopfront rentals in Causeway Bay fell by an average of 13.9 percent from June 2014 to June 2015, bringing the monthly cost of leasing a square foot of space in the Hong Kong retail district to HK$1550 ($200), according to a report released today by Cushman & Wakefield.

Hong Kong remains the most expensive place to rent shop space in Asia by a wide margin, with Tokyo’s Ginza being the only other Asian location to land in the top 10 globally.

New York on the Way Up, While Hong Kong is Still Sliding

In contrast to Hong Kong’s falling rents, which are said to be due to a fall in tourist numbers from the mainland, rents on New York’s Upper Fifth Avenue rose by 3.6 percent in the last year, according to the real estate consultancy, meaning the average retailer leasing a square foot of space in the swanky shopping area would need to pay $292 per month, or $3,500 per year. Could the rise in New York prices – which are now nearly 50 percent more than the highest in Hong Kong be due to mainlanders now taking their tourist dollars to the Big Apple?

In Causeway Bay a number of retailers have given up their shop space due to falling business in recent months, with landlords forced into the unfamiliar situation of scrambling to find new tenants, often from among more mass market consumer brands. In August of this year, luxury handbag maker Coach closed its flagship store in Hong Kong’s Central district, only to be replaced by Adidas, at a significantly lower rent.

Just behind Causeway Bay in the list of the world’s priciest places to rent a shop were Paris’ Champs D’Elysee, London’s New Bond Street, and Milan’s Via Montenapoleone. The following table provides a list of the 65 most expensive cities in the world, based on Cushman & Wakefield’s data

2015 Rank	2014 Rank	City	Country	Location	$/Sqft/Yr	€/Sqm/Yr
1	1	New York	USA	Upper 5th Avenue	3500	33812
2	2	Hong Kong	China	Causeway Bay	2399	23178
3	3	Paris	France	Avenue des Champs Elysees	1372	13255
4	4	London	United Kingdom	New Bond Street	1321	12762
5	6	Milan	Italy	Via Montenapoleone	1035	10000
6	8	Zurich	Switzerland	Bahnhofstrasse	895	8643
7	5	Tokyo	Japan	The Ginza	882	8520
8	7	Seoul	South Korea	Myeongdong	882	8519
9	9	Vienna	Austria	Kohlmarkt	478	4620
10	11	Munich	Germany	Kaufinger/Neuhauser	460	4440
11	12	Shanghai	China	West Nanjing Road	438	4233
12	10	Moscow	Russia	Stoleshnikov	395	3814
13	16	Singapore	Singapore	Orchard Road	337	3253
14	13	Barcelona	Spain	Portal de L'Angel	335	3240
15	14	Melbourne	Australia	Bourke Street	321	3104
16	19	Dublin	Ireland	Grafton Street	320	3091
17	18	Istanbul	Turkey	Bagdat Caddesi	312	3016
18	17	Amsterdam	Netherlands	Kalverstraat	300	2900
19	15	Oslo	Norway	Karl Johan	295	2852
20	23	Taipei	Taiwan	ZhongXiao E. Road	273	2640
21	20	Toronto	Canada	Bloor Street	260	2515
22	21	Copenhagen	Denmark	Stroget	250	2413
23	22	Prague	Czech Republic	Wenceslas Square	236	2280
24	26	New Delhi	India	Khan Market	236	2276
25	25	Athens	Greece	Ermou	224	2160
26	27	Helsinki	Finland	City Centre	204	1968
27	28	Antwerp	Belgium	Meir	181	1750
28	30	Auckland	New Zealand	Queen Street	173	1675
29	31	Luxembourg City	Luxembourg	Grand Rue	168	1620
30	24	Kiev	Ukraine	Kreschatik Street	168	1616
31	29	Stockholm	Sweden	Biblioteksgatan	167	1612
32	33	Ho Chi Minh City	Vietnam	Prime High Street	150	1447
33	34	Dubai	UAE	Prime - A	151	1454
34	35	Tel Aviv	Israel	Kikar Hamedina	150	1447
35	44	Bangkok	Thailand	Rajprasong/SukhumvitRoad	125	1212
36	42	Buenos Aires	Argentina	Florida	125	1206
37	38	Lisbon	Portugal	Chiado	121	1170
38	36	Budapest	Hungary	Vaci utca	118	1140
39	32	Rio de Janeiro	Brazil	Garcia D’avilla	117	1127
40	39	Kuala Lumpur	Malaysia	Bukit Bintang	111	1075
41	43	St Peter Port	Channel Islands	High Street	107	1033
42	40	Belgrade	Serbia	Kneza Mihaila	106	1020
43	41	Warsaw	Poland	Nowy Swiat	106	1020
44	46	Mexico City	Mexico	Mazaryk	103	991
45	37	Bogota	Colombia	Zona T - 82 Calle	100	969
46	47	Almaty	Kazakhstan	Gogol, Furmanov	100	969
47	48	Doha	Qatar	Prime High Street	92	887
48	50	Beirut	Lebanon	Rue Verdun	88	853
49	45	Zagreb	Croatia	Ilica Street	87	840
50	49	Ljubljana	Slovenia	Čopova	75	720
51	59	Taguig (Metro Manila)	Philippines	Bonifacio High Street	56	545
52	51	Bucharest	Romania	Magheru Boulevard	56	540
53	54	Bratislava	Slovakia	Obchodna ulica	55	528
54	52	Sofia	Bulgaria	Vitosha Blvd.	55	528
55	57	Juffair	Bahrain	Prime High Street	53	514
56	53	Tbilisi	Georgia	Pekini Street	50	485
57	55	Vilnius	Lithuania	Gedimino Ave	50	480
58	58	Lima	Peru	San Isidro	47	452
59	61	Muscat	Oman	High Street	43	420
60	56	Skopje	Macedonia	Makedonija Street	37	360
61	60	Riga	Latvia	Kalku St./Valnu St./Audeju	37	360
62	62	Quito	Ecuador	Av Naciones Unidas	36	345
63	63	Tallinn	Estonia	Viru Street	31	300
64	65	Belleville	South Africa	Durban Road	23	222
65	64	Limassol	Cyprus	Anexartisisas Ave	22	216

Retail Rents Still Climbing on the Mainland

While many stories have been written about China’s corruption crackdown and an economic slowdown, retail rents continue to climb on the mainland, as they do in most Asian cities.

Beijing’s Wangfujing area had the highest rental rates of any shopping street in China, at RMB 2,820 per square metre, per month, up by 8.5 percent compared to 2014. Shanghai ranked second among mainland cities, with average street-front rentals up 6.0 percent in the last year to reach RMB 2,437 per square metre, per month along the West Nanjing Road area in Jing’An district. (Which probably explains the high cost of Mingtiandi’s lunch every day).

Despite sliding forecasts for China’s topline GDP growth, the nation’s retail sales for the first ten months of this year grew by 11 percent compared to the same period in 2014, with the October government numbers showing the highest rate of growth so far during 2015.

The exception to the mainland’s rising retail rent rule was Chengdu, which saw rents drop by 5.6 percent in the last year, after the capital of southwestern China’s Sichuan province was inundated with new shop space.

The only other cities in Asia to report falling shop rentals were Singapore, where rates along Orchard Road fell by 1.8 percent in the last year to S$38 per square foot per month, and Kuala Lumpur, which reported a rental decrease of 3.5 percent. A full list of the highest rental rates in each major Asian city is contained in the following table.

City	Country	Location	Annual Rental Growth %	$/Sqft/Yr	€/Sqm/Yr
Hong Kong	China	Causeway Bay	-13.9%	2399.2	23178
Tokyo	Japan	The Ginza	3.2%	881.9	8520
Seoul	South Korea	Myeongdong	0.0%	881.8	8519
Beijing	China	Wangfujing	8.5%	507	4898
Shanghai	China	West Nanjing Road	6.0%	438.1	4233
Guangzhou	China	Tianhe	6.5%	413.5	3995
Singapore	Singapore	Orchard Road	-1.8%	336.8	3253
Chengdu	China	Chunxi Road	-5.6%	302.6	2923
Shenzhen	China	Luohu	0.9%	295.2	2852
Taipei	Taiwan	ZhongXiao E. Road	4.2%	273.2	2640
Kuala Lumpur	Malaysia	Pavillion KL	-3.5%	260.8	2519
New Delhi	India	Khan Market	0.0%	235.6	2276
Ho Chi Minh City	Vietnam	Prime High Street	0.0%	150.5	1454
Hanoi	Vietnam	CBD Fringe	0.0%	133.8	1292
Bangkok	Thailand	Rajprasong/Sukhumvit Road	15.2%	125.4	1212
Makati (Metro Manila)	Philippines	Makati CBD	22.4%	58	560

The rental rates were published in Cushman & Wakefield’s annual report, ‘Main Streets Across the World,’ which tracks over 500 of the top high street retail areas around the globe, ranking them by average rental values. The 27th edition of the report shows that rents have risen in 35% of streets around the world – despite the increased global uncertainty experienced over the past 12 months.

While the ‘Main Streets Across the World,’ report is published by Cushman & Wakefield globally, the company is known as DTZ/Cushman & Wakefield in China, after the two real estate consultancies formally merged in September of this year.