According to the latest report released by Knight Frank, the government announced further measures to cool the property market, but this time applicable to all types of property. Speculative activity may be curtailed, but prices are not expected to fall, as demand from end-users and long-term investors remains strong.
Prime Office
The government rolled out another round of tightening measures in February, which targeted non-residential property for the first time in recent years. Demand in the office sales market will be suppressed by the increased stamp duty costs. Thomas Lam, Director and Head of Research, Greater China at Knight Frank, believes local investors will adopt a wait-and-see attitude until the market has acclimatised to the new measures.
The 2013 to 2014 Budget reiterated the government’s plans to increase land supply. Nine commercial sites will be included in the land sales plan, but they will take some time to materialise and the total supply will not relieve the current office shortage in the city. Thomas expects office supply will remain limited until 2017, when major government projects such as CBD2 in Kowloon East start to come together.
Residential
The traditionally quiet season did not see a drop in buying sentiment. Residential sales increased 16.2% in February, while mass and luxury residential prices gained a further 3.4% and 0.6% respectively. Thomas says “more tightening measures might be introduced, should residential property prices continue to increase. We therefore maintain our previous forecast that homes prices will remain stable in 2013.”
Retail
While the new cooling measures increase transaction costs, potential buyers will have golden opportunity to acquire quality retail property, with more room for price negotiation. The retail sales value is set to see close to double-digit growth in 2013. With continuing expansion demand from retailers and limited supply of retail space in prime districts, rents are set to rise another 5% to 10% this year.