Commercial & Industrial Property News Update

Hong Kong - US Retailers Expansion Will Drive Up Hong Kong Retail Rent Over Next Three Years

August 24, 2012

The expansion of US-based retailers will see sky-high retail rents driven up by a further 50% over the next three years, said Jones Lang LaSalle (JLL).

JLL has warned that Hong Kong retail rent will get more expensive by half over the next three years, as US-based retailers seek to expand in the relatively stable Asia Pacific.

A number of international brands such as Abercrombie & Fitch Co and Gap Inc are expected to launch flagship stores throughout Queen's Road Central in Q1 2013.

There has also been reports of the Rolex Group renewing its retail lease at HKD 2.4 million per month - or HKD 2,400 psf per month. This is currently the second-highest rent paid for a retail store in Hong Kong.

Over the second quarter of the year, an increase in retail sales and soaring tourist arrivals from China helped retail rents for street-level shops grow by 7.4%.

"The key to retail is foot traffic and exposure," said Tom Gaffney, National Director of Retail at JLL.

"(In the CBD), you're seeing these international brands all expanding into one core area and that's going to cause a huge amount of traffic to flood to one location," he said.

Helen Mak, Director of Retail Services at Colliers International said that shops next to the Lan Kwai Fong bar and restaurant district have seen rents rise by almost 33% to HKD 2,000 psf per month.

However, Colliers added that Lan Kwai Fong street rents were still far behind those of Russell Street in Causeway Bay, which is currently the third most-expensive shopping street in the world.

Shop rents at Manhattan's Fifth Avenue remain as the most expensive in the world, followed by Avenue des Champs-Elysees in Paris.

Tags: Income properties, Commercial real estate, Shop for rent

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