According to the latest report released by Knight Frank, the government’s tightening measures on the property market continued to suppress residential sales volume, but home prices remained stable. Sentiment in the retail and office sales markets sustained, with the continual influx of capital shifting over from the residential sector. In the leasing market, the retail sector continued to outperform, while residential leasing was quiet during the traditionally slow season and office leasing remained sluggish with demand being low.
Prime Office
An increasing number of office buildings in Central saw satisfactory take-up rates in the past few months. Thomas Lam, Director and Head of Research & Consultancy, Greater China at Knight Frank believes “CBD Grade-A office rents will fall no more than 5% in 2013. Meanwhile, rents in non-core districts should rise about 5%, with Kowloon East likely to see 10–15% growth.”
Residential
The government’s tightening measures continued to suppress residential sales volume. Luxury residential prices remained stable in December 2012, while mass residential prices increased 1.2%. Over 2012, the number of residential transactions dropped 3.7% year on year, while total consideration increased 2.2%. Despite further measures expected to be announced in the coming Policy Address, Thomas expects supply to lag behind demand in the short to medium term. Home prices would remain stable in 2013, with only minor corrections.
Prime Retail
Over 2012, prime retail rents grew about 10%, while capital values surged more than 30%, given the tight supply. Thomas maintains his positive outlook for the retail sector and expects rents in prime retail areas to increase another 10–15% in 2013.