Hong Kong is the most expensive city for global retail rents, as retailers continually look to benefit from the city's growing luxury market, according to a new study.
Retail rents in Hong Kong reached $4,328 per square feet per year during the second quarter of 2013, topping CBRE's global rankings by a substantial margin. The city has the highest representation of luxury retailers in global markets, with 51 new retailers opening stores in the last year.
"Healthy tourist arrivals and lack of available space make finding an adequate unit in Hong Kong's prime retail locations a major challenge for new and existing retailers," Joe Lin, executive director retail, Hong Kong, CBRE said in the report. "Preference for spaces with these characteristics continues to generate strong demand, supporting the market's high and rising prime rent levels."
Ranking second, New York retail rents averaged $3,050 per square foot with third-ranked Paris posting an average of $1,220 per square foot.
Four of the top 10 markets -- New York, London, Zurich and Tokyo -- saw quarterly increases in prime retail rents, compared with only one market the previous quarter, CBRE reports. In Central London, prime rents increased 9.1 percent from last quarter and 20 percent from last year, driven by supply and demand imbalance on New Bond Street and Old Bond Street, the consultancy says.
Tokyo reported a 2.0 percent quarterly increase in prime rentals as the city reports low supply and strengthening confidence.
"Consumer demand and confidence conditions have notably improved thanks to a strengthening economy," said Junichi Taguchi, managing director of CBRE's retail services division in Japan. "Luxury retailers noted a positive push in demand for brand items, which have been recording high sales values in department stores since the beginning of the year."