Fifth Avenue, New York? Bond Street, London? The Ginza, Tokyo? Wrong. Russell Street, Hong Kong. At US$2,800 a square foot per year in Q2 2012, this Causeway Bay address has the highest retail rents in the world. Ouch. Fifth Avenue comes in second, at US$2,500 per sq foot. Furthermore, despite the sluggish global economic conditions, the lease rates rose over 13% quarter-on-quarter from Q1 2012. Clearly, retail therapy is still an oft-prescribed remedy for the wealth blues on the Mainland. With these rents, it’s safe to assume that shop owners are not selling trinkets and everyday household items. Want a humble slice of bread? Let them eat Belgian chocolate cake with truffle cream. Want some threads? Burberry’s welcomes you to its 7,000 sq ft store. Want to catch a flick? Oh sorry, the theater is now a Tiffany’s. Fancy gazing at a three-carat VVS1 E-colored pear-shaped rock instead?
The story of astronomical rents is consistent in prime shopping locations across Hong Kong. Average rents have risen between 25 to 50% over the past year, to over US$920 per sq ft. The next highest country is Argentina, at almost half that average. Shoppers for ordinary goods are being driven more and more into side streets, upper floors or dodgier neighborhoods. Selection is down and prices are up. There is much head shaking among consumers.
Discontentment with the influence of Chinese politics and money has swelled with the rents over the past two years. It’s unclear if and when either will dissipate. In a recent protest against government policies, a man was seen waving a British Union Jack flag, in a nostalgic moment recalling Hong Kong’s colonial past. Presumably, the flag didn’t have a Burberry label.
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