Knight Frank today releases the Greater China Q1 2015 Report which looks at the Grade-A office, luxury residential and retail markets in Beijing, Shanghai, Guangzhou, Hong Kong and Taipei.
Grade-A Office
Grade-A office rents in Beijing, Shanghai and Guangzhou are likely to fall, as abundant new supply will come on stream this year. Grade-A office rents in the core areas of Hong Kong may rise about 5%, due to limited supply. In Taipei, Grade-A office rents continued to rise in the first quarter. With more Grade-A offices coming on steam, Taipei’s office vacancy rate is set to increase, but rents should remain stable in the second half of the year.
Luxury Residential
A combination of favourable policies and pent-up demand is set to fuel growth in Greater China’s luxury residential market in the second quarter of 2015. End-users looking to upgrade to bigger and better properties will be the dominant category of buyers.
The residential market in Mainland China will improve with rises in both prices and sales in the second quarter. In Hong Kong, we maintain our forecast that luxury home prices in Hong Kong could drop 5% in 2015 with expectations of a rise in the US interest rate in the second half of the year.
Retail
In the coming year, there will be abundant retail supply in Beijing, Shanghai and Guangzhou, but demand is expected to be relatively weak. Retail property rents may come under pressure, but rents in well-managed shopping centres will remain strong.
The Taiwan Tourism Bureau welcomed an additional 11 Mainland Chinese cities for individual travel in mid-April and a ‘high-end tour’ scheme was also proposed. This is expected to further promote Taiwan’s retail market. Along with rising demand for retail space, retail rents and prices in Taipei will see further growth.
In April, the Hong Kong government announced the tightening of individual travel policies for Shenzhen citizens from ‘multiple-entry’ permits to ‘one visit per week’ permits. For the rest of the year, it is expected that rents of street shops in prime retail areas will continue to fall, but rents in prime shopping malls will remain firm.