NYC Dethrones Hong Kong as Most Expensive Retail Center

Continued COVID-19 restrictions in China have stripped Hong Kong’s famed luxury district of its title as the world’s most expensive retail destination, a mantle that now belongs to New York’s Fifth Avenue.

That’s according to a Tuesday (Nov. 22) report by the Financial Times (FT), citing the Main Streets Across the World report by real estate firm Cushman & Wakefield, a once-annual survey released this week for the first time since before the pandemic.

“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,” Dominic Brown, Cushman’s global head of demographic insights, told FT.

The report found that average annual rents for Upper Fifth Avenue shops were at $2,000 per square foot during the third quarter, a 14% jump versus pre-pandemic levels. Average rents in Tsim Sha Tsui, Hong Kong’s Main Street shopping district, fell 41% to $1,436 per square foot during the same period.

The FT report noted that while Western countries have reopened, Hong Kong still requires masks and several COVID tests for visitors following their arrival. It has also seen a drop in tourists from mainland China, apparently turned off by a five-day quarantine requirement for when they return.

PYMNTS reported in August that China’s stricter approach to COVID-19 has encouraged more companies to expand in the United States, diversifying their international efforts. Growth in the U.S. drove luxury earnings for the first part of 2022, while Chinese sales slowed.

Last month, figures from Cushman & Wakefield showed U.S. retail vacancies fell to 6.1% in the second quarter, a 15-year low, as consumers continued to resume in-store shopping. The firm also found that asking rents for space in shopping centers during that period were 16% higher than in 2017.

The Main Streets Around the World report also pointed to the importance of consumer confidence for retailers, noting that many consumers are anxious about the year ahead due to inflation, higher rent and mortgage payments, and food and energy costs.

That’s in keeping with PYMNTS research that found most consumers still feel pressure from inflation despite its decline. It’s led them to change how they shop and what they shop for, with many believing that relief from price hikes and stagnant wages is unlikely to arrive soon.

The PYMNTS November report “Consumer Inflation Sentiment: Inflation’s Long Consumer Spending Shadow” found that 80% of consumers said they are worried about the future due to inflation, and 45% reported that they’ve developed a gloomy view of the future because of their struggle to pay their monthly bills.

Rising prices remain consumers’ most pressing economic concern, with two out of every three respondents saying they were either very or extremely concerned about the outlook for the months ahead.

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