With Prada out, can Hong Kong’s Russell Street outshine Fifth Avenue or Champs-Élysées as the world’s costliest retail strip?

Early Light Group, the landlord of Plaza 2000, is willing to cut rent by 44 per cent for the next tenant

Market observers expect overall rents in Russell Street to fall by up to 30 per cent as social unrest has dampened the overall spending mood, particularly for luxury goods

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Russell Street in Hong Kong’s shopping district of Causeway Bay on June 14, 2015. The street has been the world’s most expensive retail strip, surpassing New York’s Fifth Avenue and the Champs-Elysees in Paris in rent. Photo: SCMP

Published: 7:15am, 11 Sep 2019Updated: 12:00pm, 11 Sep 2019

Landlords in Hong Kong’s Russell Street, the most expensive shopping address on the planet, are likely to slash rents after fashion house Prada declared it would not renew the lease on its flagship store next year, according to market observers.

Prada’s landlord has offered to cut the rent for its next tenant at Plaza 2000 on Russell Street, by a staggering 44 per cent as luxury vendors come under increasing pressure from a marked slowdown in sales.

Analysts expect other landlords to follow suit, and warn there could even be an exodus of other global retailers from the famous shopping area in Causeway Bay.

They expect retail rents in the street – famous for its luxury goods – to tumble by as much as 30 per cent this year as leases come up for renewal. Customer footfall, already on the slide because of the rise of online shopping, has taken a further hit from the three months of often violent street rallies that have gripped Hong Kong.

Russell Street in Causeway Bay, Hong Kong on 2 January 2017. Photo: Felix Wong

“The retail leasing market will definitely come under downward pressure as the recent social unrest has already dampened the overall spending mood, particularly for luxury items,” said Helen Mak, senior director and head of retail services at Knight Frank.

She said spending on luxury goods dropped almost 30 per cent in 2018 from a peak five years earlier as tourists’ footfall declined and spending weakened. Landlords of shops catering to top-end retailers may face a similar magnitude of decline in terms of rent, she said.