Knight Frank today releases the Greater China Q2 2015 Report which looks at the Grade-A office, luxury residential and prime retail markets in Beijing, Shanghai, Guangzhou, Hong Kong and Taipei.
Grade-A Office
In Q2 2015, the Grade-A office markets in Shanghai and Hong Kong performed well, displaying notable rises in rents. In Hong Kong, abundent new supply will come online in Kowloon East in the second half of this year, which is expected to impose slight pressure on the area’s rents. The average rent in Beijing slightly fell 0.6% quarter on quarter due to an abundant supply. In Taipei, Grade-A office leasing demand remained strong, with a net absorption of over 40,000 sqm in the first half of 2015.
Luxury residential
Amid the continual implantation of easing property market policies in China, many homebuyers returned to the market in Q2, with luxury residential market seeing robust demand and abundant supply. In the coming few months, housing demand will further increase, which are expected to push up both luxury home sales and prices. In Taipei, with the government significantly increasing housing tax on luxury homes, home prices are expected to weaken in the coming 12 months.
In Q2, the number of luxury homes worth HK$10 million or above sold in Hong Kong increased 49% year on year. This reflects the return of investors to the luxury residential market. Strong demand, coupled with limited supply in the short term, is expected to push up Hong Kong luxury residential prices further in the year.
Prime Retail
Retail rents recorded slight drops in Beijing and Shanghai in Q2 2015, but the markets remained buoyant, with consumer demand remaining strong. The Chinese government slashed its import tariffs on certain goods to stimulate local spending. This is likely to benefit high-end shopping centres selling import goods. In Taipei, the surges in retail property prices and rents continued to force tenants with lower affordability to relocate to nearby lanes or upper-level units.
In Hong Kong, the retail sales market remained week in 2Q. The slowdown is not expected to improve in the short term and retail rents are likely to decrease further in the year.