Knight Frank launches the latest Hong Kong Monthly Report. The office leasing market became more active in January, following the traditional low holiday season of December. In residential market, buyers continued to seek new, small to medium-sized flats in January. For the retail market, rents of retail properties in the prime sections of main shopping streets are expected to remain firm in 2015.
Prime Office
There were a number of office leasing transactions involving small spaces between 2,000 and 4,000 sq ft last month. Demand was also strong for fully-fitted offices, as tenants were becoming increasingly wary of rising renovation costs.
Looking ahead, David Ji, Director, Head of Research & Consultancy, Greater China at Knight Frank, expects Grade-A office rents in Hong Kong’s core business areas to remain stable or increase by a slight 5% in 2015, given the limited supply and low vacancy rates. Mainland Chinese companies, with their continuing business development in Hong Kong, are expected to remain the key drivers of demand for Grade-A offices in Central.
Residential
In the 2015 Policy Address, the government proposed a pilot scheme to sell public rental housing to “Green Form” applicants, of which the impact to the overall residential market is expected to be minimal, given the limited number of units being offered.
In the short to medium term, David believes the government should be able to meet the ten-year housing supply target of 480,000 units, but after 2020, success will largely depend on whether the government can secure enough land for development.
Retail
As consumers continued to shift towards the middle end of the retail sector, mass-market retailers remained active in the retail property leasing market.
This year, David expects overall rents of street shops in major shopping districts to slightly decline, but rents of stores in prime sections of main shopping streets to remain firm, due to their scarcity. Rents in core shopping centres are estimated to slightly rise in 2015.