Grade-A Office
Hong Kong Island
In April, the Grade-A office leasing market in Central was quiet, mainly as a consequence of the limited available stock. In a low vacancy environment, landlords are standing firm on asking rents and becoming more selective of the tenants. Many Mainland companies are no longer in expansion mode or have even pulled back from the Hong Kong market in the past few months. With no new drivers in the market, the leasing momentum in Central remains weak.
Kowloon
The number of leasing transactions in the Kowloon Grade-A market fell over 40% month on month in April, owing mainly to the Easter holidays. About 40% of the transactions on the Kowloon side were recorded in Kowloon East. Demand was mainly from the construction and insurance industries. Looking ahead, we expect rents in Kowloon East to increase only mildly from 0% to 2% in 2019.
Residential
Hong Kong’s residential sales surged 49.5% MoM in volume to 7,822 units in April, according to the Land Registry. This was the highest level of monthly transactions since September 2016, adding to signs that the property market is warming up seeing substantial demand for primary residential properties. Meanwhile, interest in luxury homes in the secondary market remained high. With corporations resetting their budgets entering the new financial year in April, luxury residential and serviced apartments saw higher leasing demand.
Retail
Hong Kong’s retail sales continued to trend downward in March as a result of weak market sentiment. Restaurants outperformed other retail segments during the month. Food and beverage retailers have also dominated leasing enquiries for shops at both high street level and in malls recently. Shop rentals in core retail areas such as Central and Causeway Bay are still facing downward pressure, as vacancy in prime shopping streets remains high and absorption is taking place slowly.