According to the latest report released by Knight Frank, the primary residential market remained the most active among Hong Kong’s property sectors in December. Grade-A office leasing and sales remained sluggish with the impact of the holiday season and the government’s continuing implementation of cooling measures. Meanwhile, in the retail sector, a number of retailers continued to expand in major shopping districts, with some transactions involving duplex shops.
Residential
In December, the residential market remained dominated by primary property sales, with benefit packages offered by developers offsetting some of the impact of the government’s cooling measures. With primary prices in certain districts now close to or even lower than secondary prices in the same area, sales of secondary properties were further suppressed. The leasing market was quiet in the traditional low season.
Thomas Lam, Director and Head of Research & Consultancy, Greater China at Knight Frank, expects both home rents and prices to edge down in 2014. Luxury residential rents could dip 5-10%. As to residential sales, mass home prices are set to drop 10-15% this year, while luxury residential prices will be more resilient, dropping only 5-10% in 2014.
Prime Office
As the year-end holidays approached, prime office leasing activity was subdued last month. The most notable transaction in the sales market was Swire’s en-bloc purchase of the 389,000-sq-ft DCH Commercial Centre in Quarry Bay at about HK$10,000 per sq ft.
In 2014, about one million sq ft of new Grade-A offices is scheduled for completion, primarily in Kwun Tong and Aberdeen. Thomas expects core business areas will see stable rents and slight drops in prices, while those in decentralised business areas will remain stable.
Retail
Despite the change in consumption pattern of tourists for the first eleven months of 2013, retail sales value still saw a double-digit increase, up around 11.6% compared with the same period of 2012. This positive growth – albeit slower than in previous years – combined with the limited supply of retail space in major shopping districts, continues to support retail rents in prime streets. However, the retail property sales market was dampened by the government’s cooling measures in 2013.
Thomas says, “Looking forward, we expect that rents of stores on prime streets will remain stable this year, but their prices could drop slightly.”