According to the latest report released by Knight Frank, the government’s new tightening measures reduced residential transaction volume in November, but prices remained stable. Some investors shifted to non-domestic assets, boosting sales in office and retail properties.
Prime Office
"Office sales stayed buoyant last month, with a number of major deals involving new Grade-A office buildings in Kowloon East. Meanwhile, leasing activity continued to lag behind that of sales. However, asking rents in core areas such as Central showed signs of stabilising, following an increasing number of buildings in the area recording satisfactory take-up rates over the past few months due to more flexible rentals," Thomas Lam, Director and Head of Research & Consultancy, Greater China at Knight Frank, says. "The vacancy overhang in Central is likely to be cleared from the market in the short term and we believe office rents may bottom out in the first half of 2013."
Luxury Residential
The new measures reduced residential sales by 19.3%, month on month, to 7,035 in November. However, due to the limited supply of flats, a low unemployment rate and an inflationary environment, Thomas expects residential prices to remain relatively stable over 2013, with mild upward or downward movement of less than 5%. "As potential buyers who cannot afford the high prices, or are waiting for a price drop, are expected to shift towards the leasing market, home rents are expected to gain 10-15% next year with sustained supply and stable demand," Thomas says.
Prime Retail
In November, several major retail property sales transactions were recorded in both core and non-core districts, with foreign and local institutional investors actively acquiring quality retail properties for long-term investment. Given the limited supply of prime retail space, international brands’ expansion and sustained robust tourist arrivals, Thomas maintains his positive forecast that retail rents in prime locations would rise by 8-10% in the coming year.