Knight Frank launches the latest Hong Kong Monthly Report. Amid the recent unstable political atmosphere in Hong Kong, many companies have prepared contingency plans, leasing fully furnished and IT-equipped serviced offices in non-core business areas to be used as temporary operation centres, if necessary. In the residential sector, although transaction volume dropped for the second consecutive month in September, prices remained firm and a number of major luxury sales transactions took place. In the retail property market, landlords further softened their stance on asking rents with retail sales slowing. The sector continued to be supported by the spending on necessities and products towards the mid end of the market, by both locals and Mainland tourists.
Prime Office
Hong Kong’s Grade-A office leasing market remained relatively stable in September, with the average rent increasing another 0.5% month on month. Despite the fact that financial services and banking tenants were more cost-conscious, they continued to drive considerable office demand in the city. Meanwhile, aggressive expansion activity by the medical beauty sector has absorbed considerable office space in the past few months. Offices in convenient locations with high footfall rates were especially sought after by this sector. David Ji, Director, Head of Research and Consultancy, Greater China at Knight Frank expects the office rents across the city are to be stable for the remainder of the year.
Residential
In September, the number of home sales in Hong Kong dropped for the second consecutive month, by another 4.1% to 5,958 transactions. Though the overall volume of transactions dropped, sales of luxury units priced HK$10 million or above rebounded 6.5% and luxury residential prices grew another 1.1% month on month—the most notable growth since prices started to rebound in May.
With abundant supply in the pipeline, asking prices will remain competitive. David expects overall mass and luxury home prices to drop 0–3% and 3–5%, respectively, over 2014.
Retail
Slower retail sales continued to soften the stance of retail property landlords during rental negotiation. In September, rent cuts were recorded, but major transactions of prime and high quality retail properties with significant rent increases were still recorded.
However, slower sales of luxury products will suppress the growth of retail rents in prime shopping streets. David expects prime street rents to remain stable or slightly decrease during the remainder of the year.