Will New York be Replacing Hong Kong as the Biggest Luxury Shopping District in the World?
In 2021, China’s economy recovered and performed the best overall post pandemic. Today, there has been a shift in their performance with the US economy beginning to bounce back due to lifted lockdown restrictions and everyone returning back to work. Now, Manhattan, New York has taken the crown for the world’s priciest retail district by rent. With Hong Kong’s Tsim Sha Tsui district being second, Milan’s Via Montenapoleone being third following London’s New Bond Street and Paris’ Avenues des Champs Elysees being fourth and fifth respectively.
Courtesy of Financial Times
According to the Financial Times, the average rent for Fifth Avenue experienced a 14% surge post pandemic at $2,000 per square foot. Sales have increased by 1.3% month on month even with inflation problems. The average rent for Tsim Sha Tsui fell 41% and is now $1,436 per square foot. Sales have decreased by 1.6% in September. When talking to the Financial Times, Cushman’s global head of demographic insights, Dominic Brown said, “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.”
Courtesy of Bloomberg Business
At the moment, Hong Kong is still experiencing lockdowns, requiring masks and Covid tests. The government has put in place several strict precautions for people traveling in and out of the country. Hong Kong was known for being Asia’s financial hub and its luxury shopping district is known internationally and within mainland China. There are a number of big luxury brands that have set up shops there. Luxury shopping is often driven by tourist travel and Hong Kong's economy is dependent on tourists traveling and spending. Due to protests in 2019 and the continuing struggles with Covid since 2020, tourists have not been traveling to Hong Kong to shop, bringing down the economy rapidly.
Courtesy of WWD
The decrease in sales and rent may not be a bad thing for Hong Kong. It could lead to brands in Tsim Sha Tsui to negotiate rent or close their store entirely. Lower rent also gives smaller brands more opportunities to set up shops in the district for a cheaper price than before, hoping to get more customers and press. This will make the district appear to have a more diverse selection of brands with a mixture of luxury, independent, unique brands and mom and pop shops altogether, which could bring in more shoppers.
Courtesy of Bloomberg Business
It is hard to tell where Hong Kong’s Tsim Sha Tsui district will go from here with the unpredictability of covid being their biggest problem right now. As time goes on and covid restrictions hopefully lighten up, more people will begin to shop in Hong Kong as they did before. People will continue to shop in New York as before but perhaps with the new lower rent, more shops will have opportunities to move into Hong Kong and more clientele will come to shop as a result.
