Despite retail rents growth remaining flat in the city over the last year London is still one of the most expensive global locations for retailers, new analysis published today reveals.
International property company CB Richard Ellis (CBRE) says that London has the fourth highest rental rates in the world with the West End area of the city costing $909 (£554) a sq ft per annum.
New York’s Fifth Avenue is the most expensive location costing more than double the annual rental rate of the West End at $1,900 a sq ft, followed by Hong Kong at $1,697 and then Sydney, Australia at $1,301.
Ray Torto, Global Chief Economist at CBRE, commented: “The recovery in the global economy is multi-speed. Economic growth continues to be strong in Latin America and the Asia Pacific, but is much weaker in Europe and North America.
“In the developed economies, the ability to maintain interest rates at a level that will encourage sustainable economic growth, while also keeping a lid on inflation, will be the key challenge.”
Hong Kong saw the fastest rise in rates in the first quarter of 2011, jumping 46 per cent compared to Q4 of 2010 due to a number of high profile leasing deals completed at key locations on Pedder Street.
Rental levels grew by 6.9 per cent year-on-year during Q1 in the Americas and 11.1 per cent in the Asia Pacific area, despite a number of natural disasters, whereas rates across Europe, the Middle East and Africa rose by just 0.5 per cent as consumer spending remained low.
Peter Gold, Head of Cross-Border Retail for EMEA at CBRE, said: “Europe’s economic recovery continues, but the overall rate of growth is still low and retail sales were flat on the whole in the first quarter of 2011.
“In spite of the challenging trading conditions, occupier demand for prime pitches in key European cities is still strong and this includes markets that are facing some of the most challenging economic conditions such as Ireland and Spain.
“It is arguably an ideal time for retailers to access prime space in these markets as rents are low.”