Causeway Bay remains the world's most expensive shopping street in 2019

Rents in Russell Street can go as high as $2,745 psf per year.

Russell Street at Causeway Bay has retained its crown as the world’s most expensive shopping street with stores being leased out at $2,745 per sqft in a year, according to a new report by real estate agency Cushman & Wakefield (Cushwake).

New York’s Upper 5th Avenueand London’s New Bond Street followed at $2,250 psf/yr and $1,714 psf/yr, respectively.

But Cushwake clarified that the report was based on data as of June 2019, way before the pressures on the retail market intensified.

"Since then, however, the Hong Kong retail market has come under growing pressure from local social unrest that has led to a sharp drop in tourist arrivals and retail sales, as well as interruptions to retailer operations, especially during weekends. As a result, retail rents have fallen across all submarkets in recent months and the outlook for the remainder of the year is muted," said Kevin Lam, executive director, head of retail services, Hong Kong at Cushman & Wakefield.

Despite this, Lam noted that retailers are grabbing at the opportunity to return to high street as high rents fell under ongoing market pressures.

"However, some retailers see the current market correction as a rare opportunity to return to the high street, and we therefore expect some adjustment in retail trade mix. In particular, trades that focus on mass-market demand and local consumption, such as the education, lifestyle and sports/athleisure sectors, will fare better in the current environment. We are seeing a number of such retailers cautiously look for opportunities to expand or to seek a better rental package," he added.

Hong Kong’s rental outlook, although resilient in the face of current headwinds, is uncertain, said Cushwake.

Report author Darren Yates, head of EMEA retail research at Cushwake, noted that this year’s results show the resilience of premier retail locations globally. “Rents on the world's top retail streets have been fairly stable and there is greater clarity on where retail is heading. In Asia Pacific, retail has generally performed well across a very diverse group of markets."

Cushwake noted that the APAC region is in a relatively strong position, with rents in over 80% of locations covered either rising or stable. India recorded a particularly strong performance, with solid rental growth across several cities.

Across greater China, seven locations ranked in the top 20 in the Asia Pacific list, including Hong Kong (1st), Beijing (6th), Shanghai (8th), Shenzhen (11th), Guangzhou (13th), Taipei (15th) and Nanjing (20th). All of their rankings remained unchanged from last year, besides Nanjing, which moved three places up to round out the list.

“Most major cities in mainland China continue to see a significant amount of new retail development, with activity being driven by both domestic and international retailers, the latter continuing to pursue a strategy of opening in multiple locations. A variety of sectors are active, including fashion, children's education, cosmetics, entertainment, luxury, lifestyle, fitness and F&B,” the report noted.

Photo courtesy of Wpcpey (Wikimedia Commons).