Hong Kong is World’s Most Expensive Retail Destination
Hong Kong is World’s Most Expensive Retail Destination
August 1, 2012
Singapore’s retail market remains competitive at #18
Hong Kong is the world’s most expensive shopping destination as significant inbound tourist flows and continued increases in domestic wealth fuels occupier demand from international fashion and luxury retailers, according to new research from global property advisor CBRE Group, Inc.
The CBRE rankings of prime global retail rents saw little change in the first quarter of 2012 (Q1 2012) compared to the previous quarter. Hong Kong remains at the top of the rankings with retail rents at US$3,864 per square foot (psf) per annum. New York retained the number two position at US$2,475 psf annum. Both cities experienced significant increases in retail rents quarter-over-quarter. Singapore is number 18 on the list with rents at US$455 per sq ft per annum, no change from the previous quarter.
Letty Lee, Director, Retail Services, said “Singapore’s rents remain competitive and this has given global retailers a good reason to set up in Singapore. Several fashion labels have either expanded their presence in Singapore with a South East Asia flagship status or have established their first standalone stores.”
Notable ones include Coach in Wisma Atria (4,600 sf), Tory Burch, new to Singapore at Wisma Atria (2,500 sf), Tommy Bahama, (1,900 sf at Wisma Atria), Fendi, (2,200 sf at Ngee Ann City), and J Lindeberg, (1,200 sf, new to Singapore at Mandarin Gallery). Earlier this year CBRE’s 2012 edition of the annual survey “How Global is the Business of Retail” found that Singapore to be the most targeted market in Asia for European retailers, with 39.9 per cent of European brands present here. The proportion of top retailers being represented in Singapore has increased slightly from 38.5 per cent from the year before.
The remaining top five rankings in the latest survey on the most expensive retail destinations were also unchanged from the prior quarter: Sydney (US$1,112 psf per annum) was third, followed by Tokyo (US$1025 psf per annum), with London (US$956 psf per annum) completing the top five as competition for prime locations in the city’s West End contributed to an annual rental increase of 5.6 per cent.
Globally, total retail rents increased by a modest 0.8 per cent quarter-over-quarter in Q1 2012 as concerns over the eurozone debt crisis and weak global economic growth continued to affect consumer and retailer confidence. Despite these fears, occupier demand for prime space in many major cities remained strong, and prime space was in short supply in many markets.
The Americas region led the way in Q1 2012 with retail rent growth of 3.4 per cent quarter-over-quarter, largely due to significant demand in a handful of U.S. cities such as Washington DC, Miami and Seattle. Positive quarterly growth (0.5 per cent) was also registered in Asia Pacific following strong interest from international, fashion and luxury retailers. Europe, Middle East and Africa (EMEA) continued to be a target for many American brands; however, the region experienced significant rental declines in some markets, including Athens and Belgrade, and averaged a quarterly decline of -0.2 per cent.
Overall, consumers maintained a cautious approach to spending in Q1 2012 due to the uncertain economic climate, particularly in Europe, although sales figures displayed an improvement on the previous quarter. Consumer spending rose in North America, while retail sales in Asia remained positive and benefited from a strong festive period.
Despite occupier demand for prime space remaining strong and improved sales on the previous quarter by 0.5 per cent, Europe is still being affected by consumers’ cautious approach to spending.
Ray Torto, Global Chief Economist, CBRE, commented:
“Overall, this quarter has seen more positive aspects than the last; with improved consumer spending as well as steady occupier demand and new shopping centres bringing benefits to emerging markets. Despite concerns over the eurozone and a slowing world economy, retailer demand for prime space in major cities remains strong; however, prime space is in short supply in many markets. This mismatch between demand and supply means that activity levels are not as high as they could be. Equally, retailers continue to target the best locations in the more mature markets of Western Europe and the wealthier markets in the Asia Pacific region.
“Cross border retailing is also increasing as middle class populations grow in emerging markets and retailers from more mature markets seek new opportunities for growth. The growing demand for modern, high quality retail space in emerging markets has led to a boom in shopping centre development which is making it easier for retailers to enter these territories.”
Neither CBRE nor its affiliated companies make any warranties or claims on the implied accuracy of the information contained herein.
About CBRE Group, Inc.
CBRE Group, Inc. (NYSE:CBG), a Fortune 500 and S&P 500 company headquartered in Los Angeles, is the world's largest commercial real estate services and investment firm (based on 2016 revenue). The company has more than 75,000 employees (excluding affiliates), and serves real estate investors and occupiers through approximately 450 offices (excluding affiliates) worldwide. CBRE offers a broad range of integrated services, including facilities, transaction and project management; property management; investment management; appraisal and valuation; property leasing; strategic consulting; property sales; mortgage services and development services. Please visit our website at www.cbre.com.