Hong Kong's Causeway Bay Returns to the Top as World's Most Expensive Retail Street

November, 13/2018 - 14:33
Hong Kong's Causeway Bay Returns to the Top as World's Most Expensive Retail Street

  • New York's Upper 5th Avenue slips to second after significant rentaldecrease
  • London's New Bond Street the most expensiveEuropean city and third globally
  • 30th edition of Cushman &Wakefield's annual global report shows new trends in changing retail sector

 

HONG KONG, CHINA Media OutReach - 14 November 2018 - For the first time in five years, HongKong's Causeway Bay has replaced New York's Upper 5th Avenue as the world'smost expensive retail street by rental value, according to data from Cushman& Wakefield.

 

The annual 'MainStreets Across the World' report, now in its 30th year, tracks 446 of the topretail streets around the globe, ranking them by their prime rental value as at Q2 2018 according to Cushman & Wakefield's proprietary data, whichincludes a list of the most expensive streets in 65 countries/regions.

 

Despite a smalldecline of 1.5% in average rents, Hong Kong's Causeway Bay area takestop spot, with a figure of US$2,671 (HK$20,952[1]) psf/yr. Kevin Lam, Cushman & Wakefield's Headof Retail Services, Hong Kong, said, "The retail market in Hong Konghas experienced a rebound over the last year, driven mainly by a return ofmainland Chinese tourists. With encouraging signs in tourist arrivals andretail sales during the first half of 2018, especially in the watch andjewellery category, luxury brand operators have shown interest in re-enteringthe market, if opportunities arise in good locations. However, the outlook forthe market towards the final quarter is clouded by growing trade tensions andweakened price advantage of Hong Kong in view of external factors."

 

A significant decline in rents by 25.0% in view of increasedvacancy has seen Upper 5th Avenue in New York slip back to second placeglobally, with average rents at US$2,250 psf/yr compared with US$3,000 in the previous 12-month period. London's New Bond Streetmeanwhile is the most expensive European location, in third place globally,with rents broadly flat year-on-year at US$1,744 psf/yr, underlining the factthat luxury and high-end retailers still see the UK's capital as a key retaildestination. Elsewhere in the top 10, the Avenue des Champs Élysées is infourth place (US$1,519 psf/yr), with Milan's Via Montenapoleone in fifthposition (US$1,466 psf/yr). Tokyo's Ginza is the second highest-ranked Asian street, with rents on average costing (US$1,219 psf/yr). Streets in emergingmarkets in Africa and Latin America account for most of the locations at theother end of the ranking, with rents as low as US$20-30 psf/yr.

 

TOP 10 MOST EXPENSIVE LOCATIONS BY COUNTRY (source: Cushman & Wakefield)

Rank 2018

Rank 2017

Location

City

Rent US$/SQ FT/YEAR

1

2

Causeway Bay (Russell Street)

Hong Kong

2,671

2

1

Upper 5th Avenue (49th - 60th Streets)

New York

2,250

3

3

New Bond Street

London

1,744

4

5

Avenue des Champs Élysées

Paris

1,519

5

4

Via Montenapoleone

Milan

1,466

6

6

Ginza

Tokyo

1,219

7

7

Pitt Street Mall

Sydney

964

8

8

Myeongdong

Seoul

908

9

9

Bahnhofstrasse

Zurich

854

10

10

Kohlmarkt

Vienna

515

 

Report author Darren Yates, Head of EMEA Retail Researchat Cushman & Wakefield, said: "Thefirst edition of the Main Streets report in 1988 showed New York's East 57thStreet was the world's most expensive high street at US$425 psf/yr. Since thenthe number one spot has been dominated by streets in either New York or HongKong, with only Tokyo's Ginza outside these able to achieve this."

 

Kevin Lam added, "For Hong Kong as well asother main streets across the world, there is still a significant appetite forpremium retail sites globally, with the top retailers using stores as part oftheir customer experience strategy with significant investment in store design.In addition, the continued growth of online, omni-channel retailing is becomingstandard. While technology is still a major disruptor in retailing, it is alsoenabling physical retail to fight back as it allows retailers to betterunderstand their customers and to enhance the in-store experience."

 

Combining online andoffline retail, some retailers in the US are shaping the future of retail withtheir merchandise driven entirely by app users in the local area. In China too,'New Retail', the concept of integrating online and offline channels, big data,logistics and a complex supply chain, has continued to drive rapid expansion.The role of bricks-and-mortar stores have been transformed from solely servingcustomers and selling products into an integrated platform. Traditional retailnow serves a multitude of functions, including brand promotion, an experience centrefor customers and as a distribution centre, particularly in the fresh producesegment.

 

Justin Taylor, Head of EMEA Retail at Cushman &Wakefield, said: "There is still a healthy future for the sector but we aremoving to a 'beyond retail' phase as demographics are changing and businessmodels need to adapt. Traditional retail will survive but it will likely form asmaller part of the overall tenant mix. Even in these most expensive highstreet locations, we are likely to see a mix of uses such as restaurants,childcare facilities, fitness and services.

 

"As a result,traditional retail is therefore being resized, reinvented and reimagined. Thisis most evident in the US and the UK, both of which have felt the force ofretailer restructuring and shrinking store networks, as well as a downwardreadjustment of rents in some areas. Equally, however, the disruption is alsocreating opportunities for exciting new operators and formats to emerge."

 

Click here for the full report.

 

About Cushman & Wakefield

Cushman & Wakefield (NYSE: CWK) is aleading global real estate services firm that delivers exceptional value byputting ideas into action for real estate occupiers and owners. Cushman &Wakefield is among the largest real estate services firms with 48,000 employeesin approximately 400 offices and 70 countries. Across Greater China, there are20 offices servicing the local market. The company won four of the top awardsin the Euromoney Survey 2017 & 2018 in the categories of Overall, AgencyLetting/Sales, Valuation and Research in China. In 2017, the firm had revenueof $6.9 billion across core services of property, facilities and projectmanagement, leasing, capital markets, advisory and other services. To learn more,visit www.cushmanwakefield.com.hk or followus on LinkedIn (https://www.linkedin.com/company/cushman-&-wakefield-greater-china)



[1] Exchange rate as of end of Q2 2018


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