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 rental decrease
- London’s New Bond Street the most expensive European 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, Hong Kong’s Causeway Bay has replaced New York’s Upper 5th Avenue as the world’s most expensive retail street by rental value, according to data from Cushman & Wakefield.
The annual ‘Main Streets Across the World’ report, now in its 30th year, tracks 446 of the top retail streets around the globe, ranking them by their prime rental value as at Q2 2018 according to Cushman & Wakefield’s proprietary data, which includes a list of the most expensive streets in 65 countries/regions.
Despite a small decline of 1.5% in average rents, Hong Kong’s Causeway Bay area takes top spot, with a figure of US$2,671 (HK$20,952) psf/yr. Kevin Lam, Cushman & Wakefield’s Head of Retail Services, Hong Kong, said, “The retail market in Hong Kong has experienced a rebound over the last year, driven mainly by a return of mainland Chinese tourists. With encouraging signs in tourist arrivals and retail sales during the first half of 2018, especially in the watch and jewellery category, luxury brand operators have shown interest in re-entering the market, if opportunities arise in good locations. However, 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.”
A significant decline in rents by 25.0% in view of increased vacancy has seen Upper 5th Avenue in New York slip back to second place globally, with average rents at US$2,250 psf/yr compared with US$3,000 in the previous 12-month period. London’s New Bond Street meanwhile 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 fact that luxury and high-end retailers still see the UK’s capital as a key retail destination. Elsewhere in the top 10, the Avenue des Champs Élysées is in fourth place (US$1,519 psf/yr), with Milan’s Via Montenapoleone in fifth position (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 emerging markets in Africa and Latin America account for most of the locations at the other end of the ranking, with rents as low as US$20-30 psf/yr.
TOP 10 MOST EXPENSIVE LOCATIONS BY COUNTRY (source: Cushman & Wakefield)
Rent US$/SQ FT/YEAR
Causeway Bay (Russell Street)
Upper 5th Avenue (49th – 60th Streets)
New Bond Street
Avenue des Champs Élysées
Pitt Street Mall
Report author Darren Yates, Head of EMEA Retail Research at Cushman & Wakefield, said: “The first edition of the Main Streets report in 1988 showed New York’s East 57th Street was the world’s most expensive high street at US$425 psf/yr. Since then the number one spot has been dominated by streets in either New York or Hong Kong, with only Tokyo’s Ginza outside these able to achieve this.”
Kevin Lam added, “For Hong Kong as well as other main streets across the world, there is still a significant appetite for premium retail sites globally, with the top retailers using stores as part of their customer experience strategy with significant investment in store design. In addition, the continued growth of online, omni-channel retailing is becoming standard. While technology is still a major disruptor in retailing, it is also enabling physical retail to fight back as it allows retailers to better understand their customers and to enhance the in-store experience.”
Combining online and offline retail, some retailers in the US are shaping the future of retail with their 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 serving customers and selling products into an integrated platform. Traditional retail now serves a multitude of functions, including brand promotion, an experience centre for customers and as a distribution centre, particularly in the fresh produce segment.
Justin Taylor, Head of EMEA Retail at Cushman & Wakefield, said: “There is still a healthy future for the sector but we are moving to a ‘beyond retail’ phase as demographics are changing and business models need to adapt. Traditional retail will survive but it will likely form a smaller part of the overall tenant mix. Even in these most expensive high street 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. This is most evident in the US and the UK, both of which have felt the force of retailer restructuring and shrinking store networks, as well as a downward readjustment of rents in some areas. Equally, however, the disruption is also creating opportunities for exciting new operators and formats to emerge.”
Click here for the full report.
Cushman & Wakefield (NYSE: CWK) is a leading global real estate services firm that delivers exceptional value by putting ideas into action for real estate occupiers and owners. Cushman & Wakefield is among the largest real estate services firms with 48,000 employees in approximately 400 offices and 70 countries. Across Greater China, there are 20 offices servicing the local market. The company won four of the top awards in the Euromoney Survey 2017 & 2018 in the categories of Overall, Agency Letting/Sales, Valuation and Research in China. In 2017, the firm had revenue of $6.9 billion across core services of property, facilities and project management, leasing, capital markets, advisory and other services. To learn more, visit www.cushmanwakefield.com.hk or follow us on LinkedIn (https://www.linkedin.com/company/cushman-&-wakefield-greater-china)
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