According to the latest Hong Kong Monthly Property Market Report released by Knight Frank, the Grade-A office leasing market was stable in March, while residential prices are not expected to experience sharp falls this year. Due to external economic uncertainties, prime retail rents are expected to remain stable in 2014.
Prime Office
The Grade-A office leasing market remained stable last month with tenants remaining cost-conscious and tending to renew their current leases unless cost-effective alternatives were available. Among all major office districts, Central experienced the largest drop in Grade-A office prices in March.
With multinational finance firms remaining cautious in their expansion plans, Chinese companies entering or expanding within Hong Kong are expected to continue playing a major role in the office leasing market in the near future.
Residential
In March, developers continued to launch their first-hand residential projects with the offerings of various sweeteners. In the second-hand market, home sellers started to become more flexible in asking prices and price negotiation.
Last month, luxury residential prices dipped in most major districts except the Peak, where prices remained stable.
Thomas Lam, Director and Head of Research & Consultancy, Greater China at Knight Frank, expects keen competition in the primary market. However, interest rates are expected to remain low in 2014 and supply to remain limited, and residential prices are not expected to experience sharp falls this year.
Retail
In February 2014, the value of total local retail sales dropped 2.3% compared with the same period in 2013. Echoing the change in Mainland visitors’ consumption pattern, retailers in the fast fashion as well as Food & Beverage (F&B) industries remained active in the leasing market.
In view of slowing retail sales and sky-high rents, retailers showed hesitation in the taking up of space, leading to landlords becoming more flexible during rental negotiation than they were in previous months.
Looking forward, due to external economic uncertainties, Thomas expects a slower, single-digit growth rate in retail sales this year. Prime retail rents are expected to remain stable in 2014.