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

2015/11/19 by Michael Cole Leave a Comment

russell street causeway bay

Russell Street in Causeway Bay is the most expensive retail area in Asia

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 Rank2014 RankCityCountryLocation$/Sqft/Yr€/Sqm/Yr
11New YorkUSAUpper 5th Avenue350033812
22Hong KongChinaCauseway Bay239923178
33ParisFranceAvenue des Champs Elysees137213255
44LondonUnited KingdomNew Bond Street132112762
56MilanItalyVia Montenapoleone103510000
68ZurichSwitzerlandBahnhofstrasse8958643
75TokyoJapanThe Ginza8828520
87SeoulSouth KoreaMyeongdong8828519
99ViennaAustriaKohlmarkt4784620
1011MunichGermanyKaufinger/Neuhauser4604440
1112ShanghaiChinaWest Nanjing Road4384233
1210MoscowRussiaStoleshnikov3953814
1316SingaporeSingaporeOrchard Road3373253
1413BarcelonaSpainPortal de L'Angel3353240
1514MelbourneAustraliaBourke Street3213104
1619DublinIrelandGrafton Street3203091
1718IstanbulTurkeyBagdat Caddesi3123016
1817AmsterdamNetherlandsKalverstraat3002900
1915OsloNorwayKarl Johan2952852
2023TaipeiTaiwanZhongXiao E. Road2732640
2120TorontoCanadaBloor Street2602515
2221CopenhagenDenmarkStroget2502413
2322PragueCzech RepublicWenceslas Square2362280
2426New DelhiIndiaKhan Market2362276
2525AthensGreeceErmou2242160
2627HelsinkiFinlandCity Centre2041968
2728AntwerpBelgiumMeir1811750
2830AucklandNew ZealandQueen Street1731675
2931Luxembourg CityLuxembourgGrand Rue1681620
3024KievUkraineKreschatik Street1681616
3129StockholmSwedenBiblioteksgatan1671612
3233Ho Chi Minh CityVietnamPrime High Street1501447
3334DubaiUAEPrime - A1511454
3435Tel AvivIsraelKikar Hamedina1501447
3544BangkokThailandRajprasong/SukhumvitRoad1251212
3642Buenos AiresArgentinaFlorida1251206
3738LisbonPortugalChiado1211170
3836BudapestHungaryVaci utca1181140
3932Rio de JaneiroBrazilGarcia D’avilla1171127
4039Kuala LumpurMalaysiaBukit Bintang1111075
4143St Peter PortChannel IslandsHigh Street1071033
4240BelgradeSerbiaKneza Mihaila1061020
4341WarsawPolandNowy Swiat1061020
4446Mexico CityMexicoMazaryk103991
4537BogotaColombiaZona T - 82 Calle100969
4647AlmatyKazakhstanGogol, Furmanov100969
4748DohaQatarPrime High Street92887
4850BeirutLebanonRue Verdun88853
4945ZagrebCroatiaIlica Street87840
5049LjubljanaSloveniaČopova75720
5159Taguig (Metro Manila)PhilippinesBonifacio High Street56545
5251BucharestRomaniaMagheru Boulevard56540
5354BratislavaSlovakiaObchodna ulica55528
5452SofiaBulgariaVitosha Blvd.55528
5557JuffairBahrainPrime High Street53514
5653TbilisiGeorgiaPekini Street50485
5755VilniusLithuaniaGedimino Ave50480
5858LimaPeruSan Isidro47452
5961MuscatOmanHigh Street43420
6056SkopjeMacedoniaMakedonija Street37360
6160RigaLatviaKalku St./Valnu St./Audeju37360
6262QuitoEcuadorAv Naciones Unidas36345
6363TallinnEstoniaViru Street31300
6465BellevilleSouth AfricaDurban Road23222
6564LimassolCyprusAnexartisisas Ave22216

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.

shanghai centre

West Nanjing Road in Jing’An district has the priciest street-front rentals in Shanghai

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.

CityCountryLocationAnnual Rental Growth %$/Sqft/Yr€/Sqm/Yr
Hong KongChinaCauseway Bay-13.9%2399.223178
TokyoJapanThe Ginza3.2%881.98520
SeoulSouth KoreaMyeongdong0.0%881.88519
BeijingChinaWangfujing8.5%5074898
ShanghaiChinaWest Nanjing Road6.0%438.14233
GuangzhouChinaTianhe6.5%413.53995
SingaporeSingaporeOrchard Road-1.8%336.83253
ChengduChinaChunxi Road-5.6%302.62923
ShenzhenChinaLuohu0.9%295.22852
TaipeiTaiwanZhongXiao E. Road4.2%273.22640
Kuala LumpurMalaysiaPavillion KL-3.5%260.82519
New DelhiIndiaKhan Market0.0%235.62276
Ho Chi Minh CityVietnamPrime High Street0.0%150.51454
HanoiVietnamCBD Fringe0.0%133.81292
BangkokThailandRajprasong/Sukhumvit Road15.2%125.41212
Makati (Metro Manila)PhilippinesMakati CBD22.4%58560

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.

Related Stories

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Filed Under: Retail Real Estate Tagged With: Causeway Bay, crebrief, Cushman & Wakefield, Fifth Avenue, Retail rents

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