Hong Kong, New York, Paris, London, and Tokyo were the world's most expensive high-street retail destinations in Q3 2014, according to new analysis from CBRE Group.
In the third quarter of 2014, CBRE's quarterly ranking of the world's top global retail markets remained unchanged, with global and hot-growth markets continuing to lead the list. Retailers continue to focus on high-end shopping areas and international tourists in all marketplaces. Apartments for sale
"Consumer demand is quite robust in most areas, notwithstanding the relatively bleak economic headlines," said Richard Barkham, CBRE's Global Chief Economist. "We may expect the post-crisis pattern of moments of optimism followed by times of pessimism to continue." The Americas will expand faster than the Eurozone, which has been hampered by banking sector restructuring as well as too strict fiscal and monetary policy. "Asia Pacific's growth will be slightly lower in 2014 than in 2013, but it will still surpass the other two areas by a significant margin."
Hong Kong (US$4,327 per sq. ft. per year) maintained a significant lead over New York (US$3,570 per sq. ft. per year)—where prime rent along Fifth Avenue is at record highs. In comparison to Q2 2014, Hong Kong rents were constant.
The "Occupy Central" protest, which began late in the third quarter, has had no significant influence on retail rentals in Hong Kong, according to Henry Chin, CBRE's Asia Pacific Head of Research. "In October, we saw fewer customer footfall in affected areas; but, the Christmas shopping season will help retail sales in the fourth quarter."
There is also a significant rental gap between New York and the two most important European markets: Paris ($1,331 per sq. ft. per year) and London ($1,328 per sq. ft. per year). The disparity between the top four and the remainder of the top ten markets has widened dramatically.
While the top four cities have maintained their dominance, there has been some change in the top ten rankings. Rents in Tokyo (US$1,076 per sq. ft. per annum) increased while falling in Zurich ($895 per sq. ft. per year) and Sydney (US$730 per sq. ft. per annum), causing the cities to swap places this quarter.
Tokyo continues to dominate Asia Pacific rental growth in Q3 2014, with a dearth of space in major high-street retail locations pushing retail rentals up 7.7% quarter-over-quarter. Strong rental growth was also observed in a number of emerging countries in the area, particularly in India and Vietnam, indicating the recent restart of structural economic changes after a period of stagnation. A significant 5.9% quarter-over-quarter rental rise in Ho Chi Minh City and a 4.0 percent quarter-over-quarter rental growth in Mumbai were among the highlights.
Retailer demand for prime properties in major cities across EMEA remained strong, but rental growth slowed in the third quarter of 2014, leaving most markets flat. Hamburg (up 6.5 percent quarter-over-quarter) and Munich (up 5.6 percent quarter-over-quarter) were two of the few markets to expand, indicating that, despite recent economic headlines, German domestic consumption remains strong.
During the third quarter of 2014, prime rents increased in four of the 12 prime retail corridors analyzed by CBRE Research in the United States. Prime asking rentals along Rodeo Drive in Los Angeles (US$640 per sq. ft. per annum) remain the highest in the United States outside of Manhattan, and are likely to rise higher during 2014 due to a scarcity of available space. In Q3 2014, prime asking rentals in Miami (up 3.2 percent quarter-over-quarter), Washington, D.C. (up 2.2 percent quarter-over-quarter), and New York (up 2.0 percent quarter-over-quarter) all increased. In Montreal, Vancouver, and Toronto, high-street rentals stayed steady in Q4 2013, and have maintained at their current level since then.