In the latest report released by global real estate consultancy, Cushman & Wakefield, India’s has slipped in global ranking for retail main street locations by three spots to be ranked at 31 from its previous position of 28. Khan Market in NCR, which is the most expensive retail location in India, saw no change in rental from the last year remaining on an average rental of INR 1,250/ sf/mth. The annual publication “Main Streets across the World 2014” ranked New York’s Upper 5th Avenue as the most expensive location in the world overtaking Causeway Bay in Hong Kong. Paris (3rd), London (4th) and Sydney (5th) completed the top five of the global survey.
San Francisco’s Union Square recorded the strongest annual rental growth across the globe with rentals increasing by over 30% year – on – yearn (y-o-y) in the last year. Istanbul (Istiklal Street) recorded the second highest growth in annual rental values in the same period. In India, the highest annual rental growth was recorded in Pune (J.M. Road), which recorded rise of over 8% over last year.
ASIA PACIFIC RANKING
Hong Kong’s Causeway Bay was Asia’s most expensive retail location, while Sydney’s Pitt Street Mall was ranked second in the APAC rankings followed by Ginza in Tokyo in third position. New Delhi’s Khan Market was ranked 10th in the APAC rankings. Seoul’s Myeongdong (4th) and Beijing Wangfujing (5th) completed the top 5 ranking locations.
James Hawkey, head of retail in Asia Pacific at Cushman & Wakefield, said: “Although New York took first place this year, Hong Kong’s Causeway Bay remains the second most expensive retail location on earth. In 2014, retailers showed caution expanding in Hong Kong in the face of moderating sales performance and less exuberant consumption from mainland visitors. Luxury brands were conservative, while watch and jewellery retailers notably cut back on new stores, with this sector seeing negative growth. Several leading local retailers recorded lower holiday sales. The beginning of the ‘Occupy Central’ protest in Hong Kong since the end of September has further weakened the retail sentiment in major core retail areas, especially in Causeway Bay and Mong Kok where students are still blocking some major roads.”
Closer home, top three positions on the India ranking were occupied by retail markets of New Delhi with Khan market being most expensive at INR 1,250/ sf/ month, however, it would be noteworthy to mention that the market did not see any change in rentals for the second year in a row due to non-availability of retail space in the location. Connaught Place (INR 780/sf/mth) ranked second in the India survey for most expensive retail locations. Connaught Place recording a rise of 4% y-o-y. South Extension in New Delhi and Linking Road in Mumbai were jointly on third place of the survey with retail rentals of INR 750/ sf/mth respectively.
DLF Galleria in Gurgaon and Mumbai’s Colaba Causeway recorded rental values of INR 700/ sf/ mth to be jointly ranked 4th. The last spot on the top 5 was taken by Elgin Road (shopping centre) in Kolkata that commanded an average rental value of INR 600/ sf/mth.
The report also revealed that Pune’s JM Road recorded the highest year – on – year increase in rental values of approximately 8.5% over last year on account of continued activities in the location. Being a popular destination, this main street location has been witnessing continued interest from Indian brands especially in the apparel and F&B segment. DLF Galleria in Gurgaon recorded an increase of 7.7% in the same period on account of continued demand but limited space availability in this location.
Rental values in India grew modestly (1.7%) over the 12 months to September, with moderate demand from clothing and F&B brands fuelling occupier activity. The polarisation between prime and secondary locations was evident in terms of trading, footfall and consequently occupier demand. Whilst fast fashion players are planning their entry into the market, the recently announced restrictions on Foreign Direct Investment in multi-brand retailing will continue to hamper some global retailer’s aspirations.
Sanjay Dutt, Executive Managing Director, South Asia, “Retailers have largely been active in leasing spaces on main streets as there have been limited quality options available to them in malls, which have also witnessed limited supply. We expect demand for Indian retail real estate to continue showing an upward movement owing to positive economic sentiments and increased consumer confidence. This is expected to reflect in greater uptake of space in the coming months. However, the demand growth is expected to be in emerging retail markets where retailers are looking at reaching out to larger target audiences. Meanwhile, rental growth will be highest in established and premier shopping locations as established domestic and international high-end and luxury brands focus on establishing their flagship stores in locations where supply will remain tight as ever.”