Retail property rents rise in fashion capitals

LONDON (Reuters) - Retailers are banking on sustained consumer spending in the world's major fashion capitals of London, New York and Hong Kong, where prime retail property rents continue to rise despite the economic downturn.

The latest Global Retail Rents Survey from property consultant CB Richard Ellis CBRE.L showed half the 88 property markets tracked saw retail rental growth in the year to September 30, with 65 percent of those seeing increases over the last six months.

New York's 5th Avenue remains the world's most expensive retail destination, with rental values reaching $2,200 (£1,482.74) per square foot per year, almost double the $1,236 per square foot per year commanded in Hong Kong, the world's second most expensive location.

Moscow, London and Tokyo complete the top five most expensive retail destinations globally. Moscow retail rents have hit $1,047 per square foot per year, while London and Tokyo retail rents were $834 and $829 respectively.

"It is easy to assume that falling consumer confidence and financial market turmoil across the globe are striking all retail stores, but the CBRE survey together with sale figures from retailers is showing that we have a barbell market," said Ray Torto, Chief Global Economist at CBRE.

"Our analysis indicates that the upper end is holding up well and the same is true for lower-end, non-discretionary retailers," Torto said.

EMEA continues to dominate the most expensive retail hotspots, CBRE said.

The region contains 33 of the top 50 most costly destinations and 15 of the top 25 fastest-growing retail rental markets with Tel Aviv, Oporto, Abu Dhabi, Valencia and Lyon high in the global list.

"Many retailers are opting for 'prime pitch' space in major retail cities in an attempt to secure the best long-term prospects for their business in an uncertain market," said Peter Gold, head of CBRE cross-border retail in the EMEA region.