• Property sales roar back as market buoyed by optimism

    14 September 2016

    (14 September 2016, Hong Kong) DTZ/Cushman & Wakefield, a global leader in commercial real estate services, reviewed today the performance of the residential and property investment markets of Hong Kong in the third quarter of 2016. Continuing the rebound in Q2, the residential market witnessed a robust summer with active property sales thanks to resumed confidence towards the residential prospects. For the property investment market, investors remained keen on luxury residential, while the prime office properties which are much in demand had made another high profile transaction this quarter.

    With the number of Sales and Purchase Agreements (S&Ps) for all properties rising to 18,372 in Q2, almost double the volume in Q1, confidence in the residential market resumed as the pent-up demand was channeled to the various primary projects and second-hand homes. Property sales were particularly active in recent weeks, as shown by the August S&P figure of 7,648, which was back to the level in July 2015 before property sales began to dwindle.

    Also back was the steep growth in home prices. As of September, the average net unit price of mass residential estates such as City One Shatin and TaikooShing rose by 10.9% and 7.9% from the Q2 level to HK$13,200 and HK$15,000 per sqft respectively. Counting from the trough level in April, the rebound was as much as 15.8% for City One Shatin and 10.3% for Taikoo Shing. Due to scant transactions, the price growth in luxury residential was much milder, as shown by Leighton Hill with a growth of 2.7% from Q2 to HK$34,100 per sqft in September.

    DTZC&W_Residential & Investment Market PCMr Alva To, DTZ/Cushman & Wakefield’s Senior Managing Director of Hong Kong and Head of Consulting, Greater China, commented, “Since Q2, the pent-up demand has begun to unleash towards the various primary projects, particularly those with attractive qualities, as confidence in the prospects of residential properties resumed. Solid economic fundamentals aside, the low interest rate environment and limited investment choices have encouraged the flow of money into properties again. Developers are catering to this strong appetite of home buyers with substantial and reasonably priced listings, while banks are slashing on mortgage rates to attract borrowers. Moreover, the bid prices have been higher than expected during recent land sales. The optimism will form the backdrop for further increase in home sales and price for the next quarter, although sales volume will start to slow if the rise in price becomes too sharp.”

    The property investment market recorded 44 major transactions (each with a unit value of more than HK$100 million) with a total consideration of HK$17.068 billion in Q3 thus far. Investors’ interest mainly fell in the luxury residential and office sectors. While close to half of the transactions were on luxury residential, office (en-bloc and strata-title transactions combined) accounted for more than half of the considerations, which is a key sign that investors were taking it all to buy office properties whenever opportunities arise. Mr Kenneth Yip, DTZ/Cushman & Wakefield’s Director of Investment & Advisory Services in Hong Kong, said, “In Q3 the sale of One Harbour Gate (East Tower) in Hung Hom for HK$4.5 billion – the biggest office transaction by lump sum in Kowloon this year so far – confirmed the trend that the price of office properties was still on the rise due to scant availability and strong occupier demand.”

    As for other sectors, Mr Yip added, “Amid the recent bounce back of tourist volume and a slower decline in retail sales, investors were wasting no time in seizing the discounted retail properties in Q3. There is strong investor interest in retail shops of daily goods business in non-core locations. We expect that more transactions of this type will come in the remainder of Q3 and in Q4 as investors feel that the price of some retail properties has reached the bottom.”






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