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  • Dec 22, 2014
  • Updated: 2:27pm
NewsHong Kong

Hong Kong leaves New York in the shade for prime retail rents

Prime sites 46pc more expensive than in Big Apple and four times higher than London

PUBLISHED : Friday, 08 February, 2013, 12:00am
UPDATED : Friday, 08 February, 2013, 5:20am

Bad news for small shopkeepers - Hong Kong still has the most expensive prime retail rents in the world, according to property consultancy CBRE.

At US$4,335 per square foot a year in the fourth quarter last year, the average rent for a prime shop was well above second-placed New York, where rents were 46 per cent lower at US$2,970. London came in third at US$1,080 per sq ft.

Rents in Hong Kong edged up US$1 per sq ft from the third quarter "to defy a deceleration in retail sales due to the current global economic uncertainty", CBRE said. The figures mean retailers in Hong Kong are paying HK$2,800 per sq ft per month on average for a prime retail spot.

The city's rents were driven to record highs due to the influx of wealthy mainland tourists, the expansion of luxury retailers and a shortage of prime space, CBRE said.

But it warned that many retailers had become less aggressive with their expansions or entry plans given the high rents.

"Local retailers, who are not primarily targeting tourists, cannot afford the increasing rents and in some cases are forced to relocate, which is resulting in less choice in prime districts," Joe Lin, CBRE's senior director of retail in Hong Kong, said.

Local retailers, who are not primarily targeting tourists, cannot afford the increasing rents and in some cases are forced to relocate

"However, mainland tourist spending was beginning to slow towards the end of last year and rents are not anticipated to rise dramatically in 2013 given their already high levels."

Some small restaurants and shops have been forced to shut because of soaring rents. Last week Lei Yuen Congee Noodles, behind Sogo in Causeway Bay, closed its doors after the landlord doubled the rent to HK$600,000 a month.

There is talk in the market that US fast fashion retailer Forever 21 has leased the four-storey King Wah Centre in Mong Kok for HK$6 million a month.

In the office market, real estate broker Colliers International found overall grade A office rents dropped 2.3 per cent in the final quarter, largely due to softening demand for premium office space in Central.

But the firm projected that overall grade A office rents would rebound 4 per cent this year because there were signs of increasing leasing activity.

"The improved business conditions will encourage business expansion plans," it said.

Rental performance in Central and East Kowloon would outperform the overall market slightly, it forecast, with stable economic conditions driving the grade A office market.

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jj
Looks like HK achieves another 'top rank'. But what do we make of news like this - good or bad? This of course depends who you are - landlords or the rest. As in the game of Monopoly, the odds are against those who do not own 'assets' - arh ... the 'right assets'. So the implication is that if we think the current gini figure is bad, wait for it. It will be worse, because the vast majority of people do not own cards like 'Mayfair' or 'Oxford Street'. As businesses continue to justify why the 'market' should not be interfered, the only thing that ordinary citizens can do is more street protests. So the so-called 'freest society on earth' show goes on. It is time we stopped fooling ourselves.
Byebye
Absolutely, SpeakFreely, agree. Build a university town by HK/China border, with a trainline, plus infrastructure within this purposed built university city. Just look at Cambridge, UK. HK needs innovation to lead; there are sufficient brain in HK and China to make it feasible; innovation comes from dream. Walt Disney said ~ "All dreams can come true, if you have the courage to pursue it" + "If you can dream, you can do it".
SpeakFreely
Hey Byebye, HK AO are always behind the curve. We have the worst satellite city planning in the world! In Boston you have great suburb cities for biotech where jobs and residents are built together. Here we have Tin Shui Wai without jobs! I don't know whether this is foolish or just a conspiracy between government and developers to maintain the high land price in the city.
Another note to Secreatry of Developemt rather than wasting time to look for small piece of land etc for youth hotels or in the city, why not moving all hku, city U , and poluU etc to a mega university city to a new place such as close to the border to create jobs in services and R&D and free up the land in the city? A self served mega university city can create many jobs and I don't see university has to be in the city. And with more space they can house all students.
Byebye
The most recent one I went to was outside Calgary in Canada, there were restaurants around and the big outlets was doing a rolling trade even it was in October. The one outside Boston, Washington DC or Geneva were also good ones. HK Government, just take their model and start building one, in a location where mainland Chinese or HKers can get to easily by public transport. Those successful outlets had already done their feasibility study for you!
SpeakFreely
One option is the government together with developers to build mega outlets near border that will reduce traffic to our core areas such as sha tin or mong kok or causeway bay and hopefully will help reduce rent in our city. If these mega outlets are built properly with good bargains I'm sure will attract these mainlanders. Similar in US outlets.
SpeakFreely
I'm not suggesting the quality or size of the outlet close to LP 360, that one is too small and selling junk.
SpeakFreely
Everybody suffers except landlords. Nowadays when you eat out, both service and food quality are getting worst and getting expensive. Because restaurant operators cut down on food cost and labour costs to pay for higher rent.

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