Magazines Archives - 2011 August

Global retail rentals rising
Story 10 - Property Update

THE increased demand for prime retail space has led to a hike in retail space rental for the first quarter of this year, according to a recent report by CB Richard Ellis (CBRE). Total rents for Q1 recorded by CBRE showed that rates grew by 1.9% in Q1 and by 3.8% year-on-year (y-o-y).

Fuelled by ongoing expansion by international luxury and fast-fashion brands, rents in the Asia-Pacific are seen to be rising steadily — registering rental growth of 11.1% y-o-y despite enduring a series of natural disasters during the first quarter such as the Christchurch earthquake, floods in Queensland, and the Japan earthquake, tsunami and subsequent radiation leak. Although there has undoubtedly been an economic impact, this has so far been confined to the directly affected markets.

Rental growth in the Americas is slowing but remains positive, while Europe, the Middle East, and Africa (EMEA) experienced a marginal increase over the previous quarter. In general, there is still downward pressure on rents in secondary markets, said CBRE.

Commenting on trends in the Asian region, Sebastian Skiff, executive director of CBRE Retail – Asia, said: “Demand for prime retail space remains strong across the Asian markets, given the robust retail sales underpinned by strong employment growth and high level of tourist spending. In general, international retailers are hoping to expand their footprint across the region, particularly in Hong Kong, Beijing, Shanghai and Singapore.”

He added: “While it is too early to ascertain the impact of the March 11 Japan earthquake and subsequent radiation leak, the retail leasing activity in major Asian cities is expected to remain stable. However, average prime rents in Beijing, Guangzhou and some South-east Asian cities will come under pressure given a large volume of supply coming on stream.”

The CBRE report also revealed that New York remains the world’s most expensive retail destination, with Hong Kong moving up a notch to second position, replacing Sydney, which is now in third spot.

New York’s Fifth Avenue remains the world’s most expensive high street destination, with rental values reaching US$1,900 psf per annum, an increase of more than 10% in the past 12 months.

Hong Kong (US$1,697 psf per annum) became the fastest-growing market in Q1 2011 following a rental hike of 46% quarter-on-quarter due to a number of high-profile leasing deals completed at key locations on Pedder Street.

Sydney (US$1,301 psf per annum) dropped to third position due to flat growth y-o-y, while London’s West End (US$909 psf per annum) held fourth position despite rental growth remaining flat y-o-y. Zurich rose to fifth position after experiencing rental growth of 9% (US$829 psf per annum). ra

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