Hong Kong Retains Top Ranking as Asia Pacific’s Most Expensive Retail Destination
Refocusing on International Events and Experiential Retail are Crucial to Revitalize Hong Kong’s Retail Landscape
HONG KONG SAR - Media OutReach – 21 November 2023 - Cushman & Wakefield (NYSE: CWK) today released the 33rd edition of its Main Streets Across the World report which examines prime retail rental rates in key cities globally.This report launches together with Cushman & Wakefield's Unleashing Retail Innovation: Discovering the New Edges for Hong Kong report, which examines the market opportunities that lie ahead for the Hong Kong retail market, especially around the experiential retail segment including cultural and sports elements. The report also identifies successful case studies and recommendations for market stakeholders to consider.
Main Streets Across the World report key takeaways:
- Hong Kong's Tsim Sha Tsui maintains a high global ranking as the world's third-most expensive retail street, following New York's Fifth Avenue and Milan's Via Montenapoleone, which moved up one place to take the second spot
- Hong Kong's Tsim Sha Tsui also retains its position at the head of the Asia Pacific city rankings, joined by the city's Causeway Bay district in second place and Central district in eighth
- New Bond Street in London retained fourth position globally, with the Avenues des Champs-Élysées in Paris in fifth position
Overview of Global Main Streets Market
The report focuses on headline rents in best-in-class urban locations across the world which, in many cases, are linked to the luxury sector. The rental values in this specific segment have been relatively immune to additional discounts, or the incentive packages or shared risk rental models that have become more prominent in the wider retail markets globally.
Dr Dominic Brown, report author and Head of International Research for Asia Pacific, Cushman & Wakefield, said the retail sector globally continued to show resilience:
"Retail has continued its path to recovery despite a new wave of post-pandemic challenges as central banks around the world have increased interest rates to tame the current inflationary cycle. In response, economic growth forecasts have been trimmed and consumers have reined in discretionary spending."
Headline rental changes
- Globally, rents rose on average 4.8% year-over-year
- The Asia Pacific region recorded the strongest growth at 5.3%, followed by the Americas at 5.2% and Europe at 4.2%
- Despite this comparatively strong growth, in most instances the increase in rents did not match peak inflation levels
- Globally, rental levels remain below pre-pandemic[1] levels in 55% of markets (70% of markets in Europe, 51% in APAC and 31% in the Americas)
Figure 1: Global Prime Retail Rankings 2023
|
Global Ranking 2023
|
Global Ranking 2022
|
Market
|
City
|
Location
|
Rent (USD/sq.ft/yr)
|
Rent (EUR/sqm/yr)
|
Pre-pandemic to present (LCY)
|
YOY (LCY)
|
|
1
|
1
|
U.S.
|
New York City
|
Upper 5th Avenue (49th to 60th Sts)
|
$2,000
|
€20,384
|
14%
|
0%
|
|
2
|
3
|
Italy
|
Milan
|
Via Montenapoleone
|
$1,766
|
€18,000
|
31%
|
20%
|
|
3
|
2
|
Greater China
|
Hong Kong
|
Tsim Sha Tsui (main street shops)
|
$1,493
|
€15,219
|
-39%
|
4%
|
|
4
|
4
|
United Kingdom
|
London
|
New Bond Street
|
$1,462
|
€14,905
|
-11%
|
0%
|
|
5
|
5
|
France
|
Paris
|
Avenues des Champs-Élysées
|
$1,120
|
€11,414
|
-18%
|
0%
|
|
6
|
6
|
Japan
|
Tokyo
|
Ginza
|
$912
|
€9,299
|
0%
|
0%
|
|
7
|
7
|
Switzerland
|
Zurich
|
Bahnhofstrasse
|
$907
|
€9,243
|
-2%
|
1%
|
|
8
|
8
|
Australia
|
Sydney
|
Pitt Street Mall
|
$747
|
€7,612
|
-24%
|
0%
|
|
9
|
9
|
South Korea
|
Seoul
|
Myeongdong
|
$642
|
€6,542
|
-19%
|
5%
|
| 10 |
11
|
Austria
|
Vienna
|
Kohlmarkt
|
$506
|
€5,160
|
6%
|
2%
|
Spotlight on APAC
As well as the global ranking, the report features rankings for each region. In Asia Pacific, Hong Kong and Tokyo dominate the region's most expensive streets, accounting for six of the top eight rankings.
Hong Kong's Tsim Sha Tsui (main street shops), is the most expensive regionally (third globally) at US$1,493 per sq ft per year, followed by Causeway Bay (main street shops) at US$1,374 per sq ft per year. These are followed by Tokyo's Ginza in third place in the region at US$912 per sq ft per year, and Omotesando in fourth place at US$798 per sq ft per year.
Sydney's Pitt Street Mall and Midosuji in Osaka, Japan also featured in the top eight places. Seoul's Myeongdong and Gangnam Station rounded out the top 10.
Vietnam, Japan, and India all experienced substantial growth, with average growth rates ranging from 12% to 18%. Japan's rental growth was driven by Midosuji in Osaka, which recorded an increase of 60% following a robust recovery in international tourism, while rents in Banjara Hills, Hyderabad, increased by 40% off a comparatively low starting point. Rents in Ho Chi Minh City and Hanoi are up 17% and 20% year-over-year, respectively.
While just over half of Asia Pacific's markets are yet to fully recover rental declines experienced during the pandemic, there have been improvements over the past year. Hong Kong remains the market with the greatest potential for recovery, with rents still at 42% below where they were prior to the pandemic; Australia has also seen limited recovery.
Kevin Lam, Executive Director and Head of Retail Services, Hong Kong, Cushman & Wakefield, added that, "Although hampered by the global economic slowdown, Hong Kong's high street retail recovery remains resilient, supported by growth potential from its previous low base during COVID, while securing three of the top 10 spots in the APAC Prime Retail Ranking in 2023. Thus far, we have observed notable changes in the retail landscape, with consumers increasingly opting for retailtainment, wellness and experiential offerings, which will help drive store upgrades and upward momentum in rents."
Figure 2: Asia Pacific Prime Retail Rankings 2023
| APAC Ranking 2023 | APAC Ranking 2022 | Market | City | Location | Rent (USD/sq.ft/yr) | Rent (EUR/sqm/yr) | Pre-pandemic to present (LCY) | YOY (LCY) |
| 1 | 1 | Greater China | Hong Kong | Tsim Sha Tsui (main street shops) | $1,493 | €15,219 | -39% | 4% |
| 2 | 2 | Greater China | Hong Kong | Causeway Bay (main street shops) | $1,374 | €14,007 | -46% | 6% |
| 3 | 3 | Japan | Tokyo | Ginza | $912 | €9,299 | 0% | 0% |
| 4 | 4 | Japan | Tokyo | Omotesando | $798 | €8,137 | 17% | 9% |
| 5 | 5 | Australia | Sydney | Pitt Street Mall | $747 | €7,612 | -24% | 0% |
| 6 | 11 | Japan | Osaka | Midosuji | $730 | €7,440 | 7% | 60% |
| 7 | 6 | Japan | Tokyo | Shinjuku | $684 | €6,975 | -6% | 0% |
| 8 | 7 | Greater China | Hong Kong | Central (main street shops) | $673 | €6,863 | -40% | 9% |
| 9 | 8 | South Korea | Seoul | Myeongdong | $642 | €6,542 | -19% | 5% |
| 10 | 9 | South Korea | Seoul | Gangnam Station | $572 | €5,825 | -22% | 2% |
Unleashing Retail Innovation: Discovering the New Edges for Hong Kong
Cushman & Wakefield has also released its latest report titled Unleashing Retail Innovation: Discovering the New Edges for Hong Kong, which highlights that the city's retail industry is shifting from its traditional focus on luxury and pure consumption to experiential retail, backed by growing consumer demand for innovative concepts, events and retailtainment. The health and wellness sectors are also important emerging retail market forces, as landlords, operators and retailers move quickly to introduce sports concepts into malls to boost footfall and enhance sales performance. In the 2023 Hong Kong Policy Address, Chief Executive John Lee proposed plans around "Revitalizing Tourism" via the Development Blueprint for Hong Kong's Tourism Industry 2.0, demonstrating the government's determination to create new attractions showcasing the unique appeal of Hong Kong.
Rosanna Tang, Executive Director and Head of Research, Hong Kong, Cushman & Wakefield, commented that, "Despite Hong Kong's tourism and retail industries' recovery following the border reopening, the government's data indicate that 1H 2023 overnight and same-day visitor spending on shopping is at just 55% and 18% of the 1H 2018 level, respectively. This demonstrates that the focus of visitors in Hong Kong has shifted from 'shop till you drop' to a greater desire for local culture and experience-based touring. The changing retail landscape, including the rise of e-commerce, the strengthened HK$ performance against other currencies, as well as competition from neighboring GBA cities, are posing challenges for Hong Kong retailers and mall landlords, spurring them to implement 'out-of-the-box' retail solutions to maintain competitiveness."
While consumers are increasingly seeking experiential retail offerings such as entertainment, innovative pop-ups, wellness services and cultural concepts, Hong Kong remains a strategic location well-positioned to host international mega events and concerts. Cushman & Wakefield believes that Hong Kong retailers, landlords and the government should collaborate to devise new retail experiences and to reignite the city's recognition as "Asia's World City."
Kevin Lam, Executive Director and Head of Retail Services, Hong Kong, Cushman & Wakefield, concluded that, "Currently, there are some successful examples where retail malls have become more experiential, such as the integration of sports and wellness facilities (Run Base and roller skate park) at H.A.N.D.S by Gaw Capital, the STREETATHON FAMerry Run held by Megabox, the first rock-climbing wall installation at the mall atrium in One North by Sino, as well as the first indoor skatepark Urban Park by Hysan. These examples are all robust implementations that are able to draw greater foot traffic to their malls, and also help to inject new vibes into their neighborhoods, combining retail with fun and new community engagement.
"In response to changing visitors' preferences, landlords and retailers are advised to rethink their traditional strategies to enhance their existing retail offerings, such as reactivating underutilized spaces with innovative concepts, and leveraging sports and wellness to enhance their ESG corporate branding. For instance, according to the Hong Kong Fitness Guide 2023 published by the Asian Academy For Sports & Fitness Professionals (AASFP), the number of 24-hour gyms in the city has grown by 54% from 117 in November 2021 to 180 as of June 2023.
"Experiential retail is here to stay and will continue to be in the driving seat of the new retail industry, providing dynamic experiences for consumers and visitors to enjoy. We believe the government's efforts to provide world- class facilities, hosting international events such as the Rugby Sevens, Art Basel, and music concerts, are unique experiences that Hong Kong can offer, and will have a positive spillover effect on the overall development of retail industry."
Please click here to download the report and photos.
Photo: Kevin Lam, Executive Director and Head of Retail Services, Hong Kong, Cushman & Wakefield (Left) and Rosanna Tang, Executive Director and Head of Research, Hong Kong, Cushman & Wakefield (Right) Hashtag: #CushmanandWakefield
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About Cushman & Wakefield
Cushman & Wakefield (NYSE: CWK) is a leading global commercial real estate services firm for property owners and occupiers with approximately 52,000 employees in approximately 400 offices and 60 countries. In 2022, the firm reported revenue of $10.1 billion across its core services of property, facilities and project management, leasing, capital markets, and valuation and other services. It also receives numerous industry and business accolades for its award-winning culture and commitment to Diversity, Equity and Inclusion (DEI), Environmental, Social and Governance (ESG) and more. For additional information, visit www.cushmanwakefield.com.
