According to the latest report released by Knight Frank, property sales were quiet in May, due to the implementation of the Double Stamp Duty on all property sectors in February and the Residential Properties (First-hand Sales) Ordinance on the residential sector in April. However, leasing markets across all sectors were steady amid the stable local economy and the shift of some potential buyers from purchasing to leasing.
Prime Office
Hong Kong’s Grade-A office sales market remained subdued in May, with investors deterred by the higher transaction costs from the Double Stamp Duty implemented in February 2013. The leasing sector remained stable, but transactions mainly involved relocation and renewal.
Thomas Lam, Director and Head of Research & Consultancy, Greater China at Knight Frank believes, “Central’s Grade-A office rents will remain largely stable in 2013, while rents in Kowloon East will see 10 to 15% growth over the year.”
Residential
With the new Residential Properties (First-hand Sales) Ordinance having come into effect on 29 April, most developers suspended the launch of new units. Meanwhile, sentiment in the secondary residential market recovered slightly, with an increase in transactions of small to medium-sized units due to landlords softening their stance on asking prices and there being a lack of available units in the primary market.
Thomas estimates, “Residential sales will fall about 10% this year to 70,000-75,000 units, with mass residential prices dropping around 10% and prices in the more resilient luxury sector falling 5%.”
Retail
With the slower growth in visitor expenditure and increasing shop rents in traditional core retail districts, luxury retailers became more cautious in their expansion activity, shifting to more cost-effective space in emerging retail districts.
Thomas expects, northern districts along the East Rail Line, such as Shatin and Sheung Shui, to attract increasing attention from luxury retailers targeting Mainland cross-border shoppers.