According to the latest report released by Knight Frank, the Grade-A office leasing market was stable due to the continuing support of Mainland China financial firms, but downsizing activity was witnessed in certain business sectors. In April, the overall sentiment in the residential market improved. For the retail sector, it remained dominated by mid-end players.
Prime Office
The newly announced Shanghai-Hong Kong stock market ‘through-train scheme’, which will further integrate the Hong Kong and China stock markets, is expected to have a positive impact on the office market. The anticipated boost in business volume will likely be a catalyst for Chinese financial enterprises to enter or further expand their business in Hong Kong.
Thomas Lam, Senior Director, Head of Valuation & Consultancy at Knight Frank believes that office demand from Mainland Chinese financial firms would be sustainable, as many Mainland banks are waiting to open offices in Hong Kong. This strong demand will support Grade-A office rents in the near future.
Residential
Developers continued to launch primary projects with various sweeteners, while in the second-hand market, sellers became even more flexible during price negotiation. With government measures being implemented to boost land supply, Thomas Lam expects potential buyers to take a wait-and-see approach to look for further price drops. With government’s continuing implementation of various tightening measures, Thomas forecasts a 10–15% drop in mass residential prices over 2014.
Retail
Due to the slowdown in Mainland China visitor arrivals, their change in consumer pattern towards the mid-end of the market and the resulting slower growth in retail sales, luxury retailers remained cautious in their business expansion plans. Looking ahead, Thomas foresees retail sales should continue to grow in the near term, but the pace will be slower compared to recent years. The market focus will continue to move from the high-end of the market to the medium-end.