Tuesday, Jun 30, 2015Tuesday, Jun 30, 2015

Super-rich close gap between bonds and Bond Street

Published on Apr 21, 2013 4:18 PM

LONDON (REUTERS) - Insatiable demand among the global super-rich for swanky retail properties in Europe has driven rental returns on the best shopping streets so low they are not much higher than the safest government bonds.

As the wealthy shield cash from the hazards of the financial crisis in the world's most upmarket real estate, it has widened the gulf between the best and worst retail streets, a chasm already yawning under the influence of sluggish spending by the less well heeled and an exodus of shoppers online.

London's Bond Street is the most extreme example in Europe, according to property consultant Cushman & Wakefield. Yields, or the annual rent as a percentage of a property's value, were 2.75 per cent at the end of the first quarter this year. It is the first time yields have fallen below 3 per cent since the company's records began in 1991 on a street that includes Prada, Louis Vuitton and Cartier.

"The wealthy choose to buy parts of Bond Street like the rest of us buy a tie," said Mr Stephen Hubbard, UK chairman of property consultant CBRE. "The potential for rental growth is very good, so they are not stupid things to buy."

Enjoy 2 weeks of unlimited digital access to The Straits Times. Get your free access now!