This article is from the Australian Property Journal archive
SYDNEY, Melbourne and Brisbane retail property rents are amongst the highest in the world. However rents might not stay high for long due to challenges in the sector, according to CBRE.
CBRE Global Rents report found little change in Q3 2011 compared to the previous quarter, easing -0.6%, with the Americas seeing a fall of 2.0% and rents unchanged in the Asia Pacific and Europe, Middle East, and Africa regions. This represents a significant slowdown from earlier in the year as retailers take a more cautious approach to expansion.
New York’s Fifth Avenue remains the world’s most expensive, with rents at $US1,900 per sq ft per annum.
Hong Kong remained in second place after rents rose by 52.8% to $US1,695 sq ft.
Sydney ($US1,224 sq ft per annum) retained third position followed by London ($US961 sq ft per annum) which moved up a spot to fourth place, as competition for prime locations in the city’s West End led to an annual rental increase of 5.6%.
Melbourne came in at 8th place with rental of $US776 sq ft per annum followed by Brisbane at 9th place with a rental of $US618 per sq ft.
CBRE regional director, retail services, Joshua Loudoun attributed Australia’s high rankings to the limited amount of prime retail space available and the competition from new market entrants.
“Retailers continue to expand in most key regional markets in Asia, with major international groups in the fast fashion and luxury sectors being particularly aggressive. In Hong Kong, retailers across all sectors are looking to expand their footprint to tap into high levels of spending by tourists from PRC.
“In Australia, global brands continue to open new stores, however many domestic retailers are consolidating as shoppers flock to the new foreign entrants in the market,” he added.
However Loudon warns that over the next 12 months the Australian markets would slip slightly down the rankings due to numerous challenges faced by domestic retailers, in particular the record levels of outbound tourism, together with increasing labour and utility costs that have placed further pressure on occupancy costs.
CBRE global chief economist Ray Torto said the emerging markets, particularly Asia, provide attractive opportunities for growth, although prime locations in Europe’s biggest cities are also attracting a high level of occupier demand, as consumers increasingly target major destinations with the widest choice of retailers.
Although Torto noted retailers have been taking a more cautious approach to expansion, resulting in flat rental growth across the globe in the third quarter – a considerable slowdown from earlier in the year.
PropertyReview
