Hong Kong widens lead as priciest city for retail rents

Costs are 21pc higher than in second-placed New York, survey for third quarter shows

PUBLISHED : Tuesday, 16 December, 2014, 6:47am
UPDATED : Tuesday, 16 December, 2014, 6:47am

Hong Kong keeps its crown as the world's costliest city for retail rents, ahead of New York, Paris, London and Tokyo by a wide margin, in a survey by international property consultant CBRE.

Retail rents in Hong Kong, which topped the global list for the third straight year, on average stood at US$4,327 per square foot a year in the third quarter - about 21 per cent higher than New York, the second most costly city.

Paris, with average retail rents at US$1,331 per square foot, came in third.

"The Occupy Central protest, which began late third quarter, has not yet materially impacted retail rents in Hong Kong as most prime retail shops are located beyond protest areas," said Joe Lin, executive director for retail services at CBRE Hong Kong.

Third-quarter retail sales, according to government figures, continued to grow, which shows that consumption power remains strong and mass spenders have digested the social impact of the protests, he said.

"Retail rents in Hong Kong have slowed since the beginning of this year, but the drop is likely a reflection of the fact that consumers are considering more mid-range brands," he said.

Lin, however, said high-end retailers in the city - particularly local jewellery retailers - are still looking to expand, and the influx of new retail entrants continues unabated.

"This will continue to support local retail rents in the territory in the long term," Lin said.

But property consultancy Savills has a different take on the retail outlook.

It believes retail rents for prime street shops in the city will drop by up to 10 per cent this year and a further 5 per cent next year.

"With a revision of the Individual Visitation Scheme on the cards and a possible decline in mainland spending in response to anti-corruption measures, we expect luxury retail sales to continue to slide, with both retail rents and prices to decline by 5 to 10 per cent," said Simon Smith, head of research and consultancy services at Savills.

He said the visa scheme review would likely imply more restrictions on the current policy of multiple entry.

For the January-October period, the number of tourists visiting Hong Kong rose 12.1 per cent to 49.87 million, of which more than 77 per cent were from the mainland, according to figures from the Hong Kong Tourism Board.