• Hong Kong prime street shop rents to continue dropping in 2015

    19 December 2014

    16 December 2014 (Hong Kong) – Knight Frank launches the latest Hong Kong Monthly Report. Despite the launch of Shanghai-Hong Kong Stock Connect, the Grade-A office leasing market in Central was subdued in November.

     

    However in Kowloon, with the availability of large Research from Knight frank in decspaces,leasing and sales activity remained robust. In the residential sector, robust activity continued to be registered in the primary sector with developers actively clearing their flat stock towards the end of the year. In the retail property market, with consumer patterns changing and the political environment uncertain, street shops in all major retail districts continued to register rent declines.

    Prime Office

    In November, Hong Kong’s overall Grade-A office vacancy rate fell 0.1 percentage point to settle at 3.2%, the lowest level since late 2011. This was aided by the take-up of large office space in several buildings.Meanwhile, office leasing and sales activity remained robust in Kowloon, driven by solid demand for large office space, which was in short supply on Hong Kong Island.

    Looking ahead, David Ji, Director, Head of Research and Consultancy, Greater China at Knight Frank expects to see increasing sales activity in Kowloon, especially in Ngau Tau Kok where a number of newly revitalised projects will be completed and put up for sale. Meanwhile, the leasing market on Hong Kong Island is likely to be quiet in the short-term, as Chinese firms will adopt a relatively less aggressive attitude in their expansions.

    Residential

    In November, we continued to see positive sentiment in the primary market. During the first 11 months of 2014, around 58,000 residential sales transactions were recorded of 2014, an increase of 26% from the same period in 2013. David expects the total sales volume to reach more than 60,000 over 2014, a rise of around 20% from 2013.

    With projected housing supply abundant and the prospect of a potential interest-rate rise, David Ji expects luxury home prices to drop within 5% in 2015, while the most sought-after mass residential units could enjoy a mild price growth of under 5%.

    Retail

    Amid changing consumer pattern and uncertain political environment, street shops in all major prime retail districts continued to register modest rental decreases in November. Since rents in prime street shops remained at high levels, some retailers began to reshuffle their store network to reduce rental costs. Looking forward, David forecasts rents in prime shopping malls to increase in 2015, while rents in non-core shopping malls—such as those in the New Territories near MTR stations—could increase more notably, thanks to their convenient locations for both Mainland tourists and local consumers.

    For further information, please contact:

    Angela Fung

    Public Relations Manager, Greater China

    Tel: +852 2846 7175

    Fax: +852 2840 0600

    Email: [email protected]

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