Hong Kong ranked world’s most expensive retail space

The Asia’s shopping haven Hong Kong has been ranked again the world’s most expensive global retail market, according to a new report by global property advisor CBRE Group Inc. released on May 12.

Hong Kong’s annual retail rent in high-end shopping areas in Hong Kong averaged $4,328 per square foot, which were nearly 150 percent higher than New York City and more than 400 percent higher than London and Paris.

CBRE’s report tracking the top 10 most expensive prime global retail markets reveals that strong demand from international retailers has led to record-high prime rental rates.

“Given that space is so expensive in Hong Kong’s prime shopping streets largely driven by continued demand from international luxury brands, many traditional retailers have moved into more niche secondary retail locations as they still want to be in and access the market, but have been priced out of the prime space,” Joe Lin, CBRE’s executive director of retail, said in a statement.

Ranked as the second most expensive global retail market, New York City ($2,970 per sq. ft.) accepted several new national and global retailers in 2012 that were attracted by the market’s strong international tourism features.

Europe’s prime retail markets of London ($1,053 per sq. ft.) and Paris ($1,050 per sq. ft.) are holding steady, largely due to scarcity of supply and correspondingly high rent levels. The tight supply of prime space throughout the Asia Pacific region helped maintain rent levels in Sydney, Melbourne, Beijing and Tokyo. In Sydney ($1,018 per sq. ft.), demand from international retailers (especially from the US) is high with many new brands set to enter the market in 2013.

Pacific markets gained prominence in the global retail rankings with Brisbane ($739 per sq. ft.) and Melbourne ($851 per sq. ft.) now ranking among the most expensive prime retail markets. Thanks to strong turnover and a limited supply forecast for Brisbane’s Queen Street Mall, prime rents as measured in local currency jumped 15% quarter-over-quarter.

Raymond Torto, CBRE’s Global Chief Economist, said “Prime retail rents across the most expensive global markets have held firm against a backdrop of scarce supply and preference for prime space. Despite subdued retail sales growth and strained consumer sentiments, international retailers remain focused on long-term growth strategies that have resulted in store expansions across many key global markets such as New York City, London and Moscow. However, at the current high levels, retailers are considering ‘off’ prime or secondary locations and showing a reluctance to pay record high rates.”