Knight Frank launches the latest Hong Kong Monthly Report. Boosted by the imminent launch of the Hong Kong-Shanghai Stock Connect or “through train” scheme in October, banking and financial enterprises from Mainland China expanded aggressively in Hong Kong in August 2014, absorbing premium office space in the core business district. In the residential sector, positive sentiment and competitive prices in the primary market encouraged secondary market landlords to hold on to properties or stand firm on asking prices. In the retail property market, demand for shopping space continued to shift to mass-market retailers and those targeting local consumers.
Prime Office
In August 2014, the office sales market continued to revive, as a number of tenants opted to buy their own premises to save on rent costs in long run. Landlords in Kowloon East continued to face intensive competition for tenants. With relocation costs rising and the gap in rents between the two sides of Victoria Harbour narrowing, tenants are opting to renew lease rather than relocate. After having dipped in previous months, David Ji, Director, Head of Research and Consultancy, Greater China at Knight Frank expects Grade-A office rents in Kowloon East to stablise during the remainder of the year.
Residential
In August, sales of primary residential properties remained robust. In the first eight months of 2014, the total number of primary residential sales transactions reached around 10,800 – already comparable to the total sales over 2013. Upbeat sentiment was also witnessed in the luxury residential market, with several major transactions registered in premium developments.
For the whole of 2014, David maintains his forecast that the average mass-market home price to remain stable or adjust by less than 5%.
Retail
With the consumption pattern of Mainland Chinese continuing to shift towards the mid-end of the market, demand for shopping space continued to shift to mass-market retailers and those targeting local consumers. The sports trade, for example, has witnessed robust expansion activity in recent months.
Looking ahead, David expects rents of prime street shops to remain resilient as supply is limited, while shops in secondary streets will see rents drop by up to 5% over 2014.