Retail Rents at Russell Street, Hong Kong Continued to Top in Asia Pacific

Retail Rents at Russell Street, Hong Kong Continued to Top in Asia Pacific and Rank 3rd Worldwide
Signs mounting for bounce back and increasing demand in high-end retail premises over the coming year


Russell Street, Causeway Bay in Hong Kong (US$1,205.46 per sq ft per year) topped in premier streetfront rents in Asia Pacific and ranked third in the world, as of March 2010. This is according to Colliers International Spring 2010 Global Retail Highlights, which features rents for 127 premier retail streets around the world. Compared to the same period of last year, Hong Kong’s ranking in Asia Pacific and the world remained the same. Meanwhile, retail rents at Champs Élysées in Paris were the most expensive worldwide, followed by that at Fifth Avenue in New York, which retreated from the top spot in March 2009.

In the Asia Pacific region, retail rents at Pitt Street Mall in Sydney (US$768.85 per sq ft per year) ranked second (6th worldwide) and Ginza-Chuo Avenue in Tokyo (US$545.91 per sq ft per year) ranked third (11th worldwide), as of March 2010. Other cities, namely Singapore, Shanghai, Delhi and Beijing remained in the top 50 cities of the most expensive retail rents, with a slight upward adjustment over a 12-month period.

“The high ranking of retail rents in Hong Kong can be explained by the support of strong retail sales. In April 2010, the total value of retail sales recorded HK$25.1 billion, rising 15.6% year-on-year (YoY),” said Simon Lo, director of research & advisory, Colliers International (Hong Kong). “In addition to local consumption, spending by tourists continued to provide a major impetus to the growth of the local retail sales. The number of inbound visitors rose 14.6% YoY to 2.76 million in April 2010.”

“Causeway Bay has been acting as one of the traditional shopping districts in Hong Kong. Many international retail brands have been attracted to open their shops there,” said Helen Mak, director of retail services, Colliers International (Hong Kong). “Besides, Tsim Sha Tsui is another key and prospective shopping district in the local market, which attracts the attention of retailers who set up for long-term business in Hong Kong.”

Due to the additional push of inflationary pressure and the sustained growth of inbound visitors, the local retails sales are expected to see a prospective growth. According to Colliers International’s research, retail rent of ground-floor shops in Hong Kong’s traditional shopping districts is projected to stage a growth of about 10% in the next twelve months.

Although Hong Kong’s retail market has been registering encouraging performance, retailers were still expressing caution in terms of expanding and committing to new stores. However, evidence was mounting to suggest the worst of the downturn was over and high-end retailers would be back pressing for more high profile stores. While many of the world’s rich feel more secure and comfortable with luxury purchases, demand for high-end retail premises is expected to increase over the coming year.

The global economy gaining traction and improving credit markets are positive drivers. Retailers with a strong balance sheet are quickly gaining the confidence to expand into markets previously viewed as too expensive or difficult to penetrate. Although a move to discount retail is apparent in many countries, luxury retail is still a viable sector and one that is still in a long-term uptrend. The emergence of a sizeable middle class in Asia Pacific, the Middle East and central and eastern Europe is sure to continue, and these “aspirational” consumers will be a key source of growth for many luxury retailers.

source : Colliers