According to the latest report released by Knight Frank, further tightening measures imposed by the government on all property sectors cooled down investment activity.
Prime Office
Satisfactory take-up rates over the past few months represent that a significant portion of vacant office floors have been absorbed. The average price of Grade-A offices remained stable in March at HK$19,658 per sq ft. However, the market saw more vendors lowering their asking prices toward the end of the month. The new stamp duties encouraged some office end-users to turn to leasing, particularly those eyeing property in Kowloon East. The vacancy rate in Central fell from 5% in the last quarter of 2012 to about 4.1% in the first quarter of 2013, relieving the downward pressure on Central rents.
Thomas Lam, Director and Head of Research & Consultancy, Greater China at Knight Frank believes, “Should the city’s economy remain stable, rents are likely to bottom out in the second to third quarter.”
Residential
Amid uncertainties in the property market, some homeowners, especially those in mass market, started to soften and became more flexible during price negotiation, while some developers launched new projects with price-cutting strategy, offering various beneficiary packages to boost sales. Price growth in the luxury and mass residential sectors was a mere 0.6% and 1.2% respectively in March.
Thomas expects, “Luxury residential prices will remain stable and fall no more than 5% in 2013, while mass residential prices will drop no more than 10%.
Retail
The government’s implementation of Double Stamp Duty at the end of February cooled the retail property sales market, dragging down the number of such transactions. Very few major deals were recorded in March.
Thomas believes, “Under the various market tightening policies, the retail property market will remain the most resilient property sector in Hong Kong, supported by the continuing influx tourist arrivals and gradual economic growth. With continuing expansion demand from retailers and limited supply of retail space, both rents and prices of prime retail properties are set to record mild growth of 5% this year.”