Hong Kong has lost its crown for having the world’s priciest retail district by rent to New York, after the city’s economy was hit by visitor restrictions and strict Covid measures as part of its slow recovery from the pandemic.
Manhattan’s Upper Fifth Avenue is now the most expensive street globally for luxury shopping, according to the first survey since 2019 by commercial real estate consultant Cushman & Wakefield. Hong Kong’s Tsim Sha Tsui (TST) district in Kowloon ranks second.
In the latest rankings, London’s New Bond Street slipped behind Milan’s Via Monte Napoleone, ranked as the fourth and third priciest districts in the world respectively.
“There was a marginal decline during Covid for [New York City] . . . but that has subsequently rebounded over the past year or so, [with] a bit of rental strengthening,” said Dominic Brown, Cushman’s global head of demographic insights.
Average annual rents for Upper Fifth Avenue shops stood at $2,000 per sq ft in the third quarter, a 14 per cent surge compared with pre-pandemic levels. Average rents in TST fell 41 per cent to $1,436 per sq ft over the same period.
While the west has opened up, Hong Kong still requires masks and several Covid tests for visitors after arrival. It has also lost tourists from mainland China, put off by a five-day quarantine rule still in place upon their return.
Tony Lo, head of the Midland estate agent’s commercial property branch, said the monthly rent of one 7,700 sq ft luxury outlet in TST had fallen 70 per cent since 2019 to HK$200mn ($25.6mn).
Hong Kong’s retail sales fell 1.6 per cent in September compared with the previous month, according to official data, while US retail sales saw a 1.3 per cent month-on-month increase in October despite inflation concerns.
Via Monte Napoleone recorded a 9 per cent rise in average retail rent compared with pre-pandemic levels. New Bond Street and Paris’s Avenue des Champs-Élysées — ranked the world’s fifth priciest district — saw average rents softening by 11 per cent and 18 per cent respectively.
In mainland China, Shanghai’s West Nanjing Road is ranked the globe’s 10th most expensive district, supported by “strength of domestic consumption” despite the rolling lockdowns and Beijing’s zero-Covid policy, said Brown.
Across all global prime locations, retail rents fell on average by 6 per cent compared with pre-pandemic figures. The Asia-Pacific region was the most negatively affected, with an average 12 per cent dive, while the US was the least, recording a 25 per cent average increase across the country.
The report’s findings are based on proprietary data from Cushman, tracking top luxury retail streets in 92 cities and ranking the most expensive areas by their prime rental value.