Hong Kong is world's most expensive global retail market
CBRE’s quarterly survey, which tracks the top 10 most expensive prime global retail markets, reveals that strong demand from international retailers, coupled with a modest supply pipeline, has led to record-high prime rental rates. The global property firm found that Hong Kong continues to hold the top ranking recording prime rental rates during Q1 2013 of $4,328 per sq ft per annum.
Joe Lin, executive director retail, Hong Kong, CBRE, said: "Prime rents in Hong Kong stand at record highs as tenant demand is steady and inquiries from retailers looking to enter or increase their footprint in the city remain strong. 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 the market, but have been priced out of the prime space."
New York ranked as the second most expensive global retail market at $2,970 per sq ft, followed by London at $1,053 per sq ft and Paris at $1,050 per sq ft.
The London market was shown to have held steady in the quarter, largely due to scarcity of supply and correspondingly high rent levels. CBRE said that many new retailers to the Central London market have been forced to consider alternatives to their preferred locations particularly in high-end shopping areas such as Mayfair.
Commenting on the findings of the report, 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."
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