Hong Kong’s Canton Road has overtaken Russell Street as the most expensive place to rent a shop in the Asia-Pacific region for the first time, according to a survey by Cushman & Wakefield.
The street in Tsim Sha Tsui ended 2020 at HK$944 (US$122) per square foot per month, 35 per cent lower than a year earlier, while rents in Causeway Bay’s Russell Street were down 43 per cent at HK$870, said the Asia-Pacific Main Streets Report.
Causeway Bay’s drop was its first since the second quarter of 2014.
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The famous Russell Street, which has frequently been crowned the world’s most pricey retail rental location in the last few decades, has seen a flurry of big-name luxury brands leave, including Prada, Kiehl’s and La Perla. Their departure followed the anti-government protests of 2019 and more recently the Covid-19 outbreak.
Some shops there have remained vacant, while other spaces are now occupied by sundry shops selling cheap accessories, degrading the lustre of the road.
Canton Road is likely to hang on to the top spot for another couple of years because its shops are controlled by big landlords that can offer promotion campaigns to boost sales and retain tenants amid the pandemic, said Kevin Lam, head of retail services at Cushman & Wakefield in a briefing on Thursday. Fewer luxury brands have left Canton Road than Russell Street as a result.
“Tenants would tend to opt for Canton Road because it is still dominated by luxury brands,” said Lam.
The report tracked rents in 124 locations across Asia. Four of the top 10 retail districts in the survey are in Japan, while three are in Hong Kong and the remainder in South Korea and Australia. Across Asia-Pacific, two thirds of main retail streets saw a rental decline.
Hong Kong has frequently come out on top in the region, though New York’s Upper 5th Avenue has often pipped it in global league tables. Lam said the consultancy will release the global edition at the end of the year when it hopes the pandemic will have eased in Europe and the Americas, making data collection possible.
Despite the widespread rental declines and the premium to other markets narrowing, Hong Kong’s main shopping streets still sit 30 per cent above their main rival, Ginza in Tokyo, which ranks third.
Hong Kong is unlikely to be surpassed even if streets in Europe and the US are also considered, because of the more serious pandemic and lockdown measures there, Lam said.
Rent in Hong Kong’s most prestigious shopping district, Causeway Bay, fell by half between 2013 – when visits by mainland tourists were at their peak – and the fourth quarter of last year, when they stood at an annual US$1,481 per sq ft.
The mainland Chinese market, with an average rental decline of around 5 per cent, was far less affected than regional peers, said the report. The Luohu district of Shenzhen, for example, was at the other end of the spectrum, enjoying the largest rental growth in the survey. Rents there rose by 5 per cent, to US$333 per sq ft by the fourth quarter of last year.
Despite the allure of Canton Road, Tsim Sha Tsui overall had the highest number and rate of vacant shops, at 271 and 17.7 per cent respectively, in the first two months of this year. Those were the highest among Hong Kong’s core districts and the highest since records began in 2016, according to Midland IC&I.
The tenant mix there was dominated by tourist-related businesses, and many had moved out when their leases expired, it said.
Midland expects a recovery in Hong Kong’s market this year thanks to the Covid-19 vaccination programme, the upcoming electronic vouchers aimed at boosting consumption, the anticipated reopening of the border and a stronger Chinese currency.
“The vacancy rate of street shops in major shopping areas will fall in the next six months,” said Tony Lo, director of the shops department at Midland IC&I.
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