Those who think the British capital is the most expensive retail location on the planet, think again. For the past eleven years, New York charged top dollar for its prime retail locations, but now Hong Kong is the world's most expensive district for luxury brand companies, who are competing for space to sell to Chinese tourists.
According to Business Week, the average annual rents at Causeway Bay on Hong Kong Island rose 35 percent to 2,630 dollars a square foot at the end of June from a year ago, Cushman & Wakefield Inc. estimates. Hong Kong overtook Fifth Avenue in Manhattan, while Paris’s Avenue des Champs-Elysees rose to third in a global ranking of 326 prime shopping locations published by the real estate broker today.
“New York and Hong Kong are slugging it out at the top,” Mark Burlton, a London-based partner at Cushman’s cross-border retail team, said in an interview. “The Chinese customer is helping float a lot of ships across the world,” prompting luxury stores in the main global shopping destinations to hire Chinese-speaking workers, he said. Luxury Brands
Wharf reported a 13 percent annual gain in first-half revenue generated at its Times Square mall in Hong Kong, where tenants include branches of Salvatore Ferragamo, Gucci, Chanel, Mikimoto, Christian Dior and Marc Jacobs.
International fashion brands and luxury retailers have used flagship stores in Hong Kong to break into the Chinese market and attract customers from the territory’s wealthy residents.
Burberry opened a shop on Hong Kong’s Russell Street, paying 7.7 million HK dollars a month for the property, Ming Pao newspaper reported. That compares with 3.3 million HK dollars paid by Nokia, the previous tenant, the Hong Kong-based, Chinese language-newspaper said, citing people it didn’t identify.
“There’s a huge demand-supply imbalance in the area,” said Helen Mak, Hong Kong-based head of retail services at broker Colliers International.
The pace of Hong Kong’s rental gains displaced New York’s Fifth Avenue from its top position in the global ranking, even as the average prime rent in the U.S. city rose 11 percent to 2,500 dollars a square foot, the Cushman & Wakefield study showed.
Paris rose two places following a 30 percent increase in prime rents to 1,129 dollars a foot as international retailers including Levi Strauss, Hugo Boss and Kusmi Tea opened or refurbished stores.
Image: Canton Road, HK