Russell Street in Hong Kong’s Causeway Bay outstripped Fifth Avenue in Manhattan to become the world most expensive retail street for the first time in five years, according to a survey of retail locations released this week.
Shops and mall space along the 250 metre-long retail strip, which is located three subway stops east of Hong Kong’s Central business hub, lease for an average of $2,671 per square foot per year, according to Cushman & Wakefield’s Main Streets Across the World report, which was released today.
The annual report by the property consultancy ranked the retail strip in Causeway Bay as the most expensive place to set up shop worldwide, with average rents on Russell Street found to be 18.7 percent higher than New York’s Fifth Avenue, which came in second.
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“The retail market in Hong Kong has experienced a rebound over the last year, driven mainly by a return of mainland Chinese tourists,” Kevin Lam, Cushman & Wakefield’s head of retail services in Hong Kong said in a statement. “With encouraging signs in tourist arrivals and retail sales during the first half of 2018, especially in the watch and jewelry category, luxury brand operators have shown interest in re-entering the market, if opportunities arise in good locations.”
In addition to Hong Kong, locations in two other Asian cities — Tokyo and Seoul — found a place on the list of the world’s priciest locations, with Australia contributing another representative from APAC.
Retail rents along Tokyo’s Ginza averaged $1,219 per square foot per year — less than half the cost in Causeway Bay — to earn the famed shopping street sixth place in the rankings. Sydney’s Pitt Street Mall came in just behind Ginza in the seventh spot, with rents averaging $964 per square foot, while Myeongdong in Seoul took the eighth position on the list with rates of $908 per square foot per year.
The report, which collected data on 65 countries and regions, ranked London’s New Bond Street in third position, followed by the Paris’ Champs Elysees and the Via Montenapoleone in Milan.
Russell Street Wins by Losing Less
Russell Street, serves as home to Hong Kong-listed developer The Wharf’s Time Square development, as well as hosting boutiques for Burberry, Blancpain and other luxury brands that cater to shoppers from Hong Kong and the broader region that frequent the Causeway Bay district.
However, even this list of star attractions was not enough to keep the prime retail strip from seeing rents slide 1.5 percent over the past 12 months, according to Savills.
Russell Street managed to seize the top ranking, despite the slide in rents, due to a much steeper downturn in New York’s poshest playground for shoppers.
After ranking first in the annual survey for the past four years, Fifth Avenue saw rents decline by 25 percent over the 12-month period, falling from $3,000 per square foot per year in the previous poll, to $2,250 per square foot in the latest edition.
Signs of a Slowdown in Luxury Shopping
While Cushman’s team noted a shopping rebound city-wide over the year to date, the agency still sounded a cautionary note about the near future. “The outlook for the market towards the final quarter is clouded by growing trade tensions and weakened price advantage of Hong Kong in view of external factors,” added Lam.
Even within five minutes walk of Russell Street there have been signs of downward pressure on retail rents this year.
During July, American sportswear brand Nike stepped in where Esprit faltered to lease a 7,000 square foot (650 square metre) shop in Causeway Bay’s Leighton Centre for a monthly rent of HK$1.5 million — 25 percent lower than the HK$2 million that Esprit had previously been paying each month for the same space.