China’s growing taste for shopping is pushing up retail rents in the world’s second-largest economy, and now a global survey has confirmed that in at least one key district, the cost of securing shop space is among the ten highest in the region.
According to a report issued this week by real estate consultancy Cushman & Wakefield, Beijing’s Wangfujing area saw a 4.2% rise in rental prices during 2013, pushing the cost of renting shop space in the downtown district to RMB 391 per square meter per month (US$436/sq ft/year). This year’s price increase is enough for Wangfujing to now rank number 10 in the Asia Pacific region for the cost of retail rents.
Hong Kong’s Causeway Bay remains the world’s costliest retail location, and the most expensive in Asia Pacific for the second year running. In 2013 the Hong Kong shopping area broke through the $3,000 per sq ft per year barrier for the first time in the survey’s 25-year history.
New York’s Fifth Avenue and Avenue des Champs-Élysées in Paris, which saw nearly a 40% rental rise, hold on to second and third place respectively.
The rental rate comparison is part of the 2013 edition of Cushman and Wakefield’s “Main Streets Across the World” report, which is published annually and is now in its 25th year. The report ranks the most expensive locations in the top 334 shopping destinations across 64 countries.
While Wangfujing is the country’s spendiest shopping spot, retail rentals continued to rise across the country at an average rate of 6.8 percent.
Speaking of the steady growth in the cost of shop space, Randall Hall, Executive Managing Director of Greater China at Cushman & Wakefield said, “Despite slower trading in the luxury sector and an increased supply of retail space, the country saw a diverse range of new entrants and expansions from several international brands.”
Hong Kong Rents Lead Asia – And the World
In Hong Kong rental rates rose much faster, at an average of 21.8% across the city, making it the main engine of prime rental growth across the region.
In addition to Causeway Bay landing in the top spot globally, the city’s Central district earned the second highest rents in Asia Pacific with a jump in rental rates of 23.3 percent to US$2,290 per square foot per year, and the Tsim Sha Tsui district of Kowloon landed in third in the region with a 32 percent rise to US$2,042 per square foot per year.
Across the region, the report found that Asia Pacific remained the focus for international retailers and this again translated into prime rental growth (4.5 percent) in the last year. However, the finding showed that not all retailers fared equally well, with most areas reporting slower growth in retail sales.