SHANGHAI — Beijing has landed a spot on a list of the world’s most expensive prime retail markets compiled by the global property advisor CBRE.
This story first appeared in the February 27, 2013 issue of WWD. Subscribe Today.
The Chinese capital came in 10th place on the list, which is published quarterly by CBRE. With prime rents at $4,335 per square foot in the fourth quarter of 2012, Hong Kong is ranked number one, followed by New York, Paris and London. Rents for prime retail in Beijing were $662 per square foot per year over the same period.
Skyrocketing rents in Beijing are being driven not so much by retail expansion as by the fact that the capital has very little prime retail property available, according to Sebastian Skiff, executive director of CBRE’s Asia retail operations.
“Our view is that both the consumer and retailer will be focusing more on quality rather than quantity,” Skiff said Tuesday. “We see this in a number of the latest development projects we are involved with — much greater attention from developers to create a quality environment.”
CBRE research on the global retailing landscape released in 2012 indicated that while China is adding more retail space than any other market worldwide, much of the new space being built is located in subprime locations or lacks other features that increasingly are prioritized by retailers focusing on enhancing the quality of an in-store experience for more savvy Chinese consumers rather than the breakneck expansion strategies of the past.
Pricier properties in Hong Kong are being fueled by a lack of prime real estate as well as more luxury brands vying for storefronts that are highly visible to the millions of mainland tourists who flock there to go shopping annually, said Joe Lin, CBRE’s senior director of retail in Hong Kong. “There are very few new malls in the pipeline and so international brands are competing for limited shop space,” he said. “With relatively promising economic expectations for 2013, luxury brands will continue to see Hong Kong as a profitable opportunity; however when the rents become prohibitive, retailers act carefully.”
Lin said that a slowdown in spending from mainland tourists at the end of last year will likely not cause rents to rise dramatically in Hong Kong in 2013.