This article is from the Australian Property Journal archive
SYDNEY has slipped from its position as the fourth most expensive retail market in the world to fifth place, whilst Fifth Avenue New York has lost its number one mantle for the first time in 11 years, according to Cushman & Wakefield.
Cushman & Wakefield’s latest Main Streets Across the World report found Causeway Bay Hong Kong has overtaken Fifth Avenue NY as the most expensive retail destination in the world.
Causeway Bay HK moved up from second place, after prime retail rents increased by 34.9% to $US2,630 per sq ft per annum — ahead of Fifth Avenue NY where rents increased by 11.1% to $US2,500 per sq ft. Tokyo scaled up to third place, despite recording flat growth, rents remaining at $US1,057 per sq ft.
Pitt St Mall Sydney dropped from fourth to fifth place, rents remained at $A10,000 per sqm p.a., unchanged from last year. As a result, Sydney was overtaken by the Avenue des Champs-Élysées in Paris, where rents soared by 30% to $US1,129 per sq ft p.a. — moving from fifth to third place.
In Sydney’s other retail precincts, Oxford St rents suffered a 15.4% decline to $A1,100 per sqm; George St was flat at $A5,000 per sqm and major regional shopping centres averaged $A2,070 per sqm, up 3.5%.
One the bright spot, at least Sydney remains ahead of New Bond St London, which stayed at sixth place, despite recording a 3.1% growth.
Elsewhere in Australia, Bourke St Melbourne rents increased 12.5% to $A4,500 per sqm; Perth CBD increased 7.7% to $A3,500 per sqm; Brisbane’s Queen St Mall was flat at $A5,000 per sqm; and Adelaide’s Rundle Mall increased by 10% to $A3,300 per sqm.
Meanwhile global retail rents remained resilient overall, recording a 4.5% average increase for prime locations as luxury retailers continued to slug it out for space in the top destinations. The report surveyed 326 prime locations in 62 countries, a total of 147 saw rents increasing with just 49 (15%) experiencing rental declines – compared with (19%) in 2011.
Cushman & Wakefield’s European research group analyst Martin Mahmuti said luxury retailing continues to fuel trading and rental growth across prime pitches of the global market.
“Luxury retailers are competing for the most coveted shopping destinations, exerting upward pressure on prime rental values. Despite recent slower sales growth, the luxury sector will remain resilient and continue to play a vital and prominent role in driving overall performance in the world’s premier locations,” he said.
In the Asia Pacific, Queen St Mall Brisbane filled the 10th spot.
Cushman & Wakefield HK retail transaction services senior director Michele Woo said retail activity Asia Pacific is expected to remain healthy as international retailers struggling to generate profitable trading in their own markets, look for expansion opportunities in the region.
The Americas showed the strongest rental growth of all regions. Prime rental rises in North American locations were driven by the strong performance of the US (16.3%) and Mexico (11.5%), while Canadian values recording a marginal uplift.
Conditions in the US retail market improved over the year as sales and leasing activity picked up –albeit mainly in the prime segment. However, further falls in vacancy rates and limited new supply on the market could see the overall rental rate increase over the next 12 months for the first time since 2008.
Buoyed by rises in emerging markets, rental growth in South America improved (11.6%) on 2010/2011 figure and surpassed all other regions. Brazil was yet again the engine of growth not only in economic activity but also in prime retail rents. Indeed, the city of Rio de Janeiro witnessed exceptionally strong uplifts, with rents surging by 64.7% in the highly sought after area of Garcia D’avila (Ipanema).
EMEA prime values were up by 1.7% in the year to June, boosted by the continued demand from international fashion brands and the luxury sector. Prime rents in 25 of the 31 European markets surveyed saw rents remain stable or increase, whilst they fell noticeably in countries affected by austerity measures e.g. Greece (17.1%), Ireland (15.1%) Hungary (13.3%), or by increasing supply e.g. Bulgaria (7.7%).
The prime segment of core European markets witnessed dynamic activity, underlined by a rental uplift of 14.6% in France achieved through impressive double-digit rises, primarily in luxury driven locations. Other core markets saw positive growth although at a gradually more moderate trend; United Kingdom (6.3%), Italy (5.4%) Germany (4.7%), the Netherlands (4.5%) and Spain (2.0%)
Avenue des Champs-Élysées, Paris was again the most expensive retail location in the EMEA region, recording rental growth of 30.0% over the year and widening the rental difference on second placed New Bond Street, London.
Looking ahead, Mahmuti said the main drivers behind global growth are not expected to shift significantly – with growing structural demand in tier 1 locations, market globalisation and luxury expansion in key developments.
“Asia Pacific and South America will remain the main focus of many international retailers as they take advantage of new modern supply and gradually maturing retail markets – but with new policies aimed at supporting retail, in India and China among others, potentially altering growth dynamics.” Mahmuti concluded.
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