• Uncertainties continue to plague the residential market

    6 November 2019

    (30 October 2019, Hong Kong) Knight Frank launches the latest Hong Kong Monthly Report. In the office market, leasing momentum of Grade-A office space remained slow in September, as social unrest and the China–US trade war dragged on. Grade-A office leasing transactions were recorded mainly in Kowloon East and Kowloon West. Meanwhile, political uncertainty and an economic slowdown continued to dent residential market sentiment during the month. The retail environment in Hong Kong will be extremely challenging during the remainder of the year despite the upcoming festive season.

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    Grade-A Office                                                                                                         
    Hong Kong Island

    In September, leasing momentum of Grade-A office space remained slow, as social unrest and the China–US trade war dragged on. As many cost-saving Central tenants were looking for decentralised locations, demand for offices in Wan Chai and Quarry Bay was high, in particular, for large floor plates.

    This trend is set to continue in the coming months. But over the long run, this could mark the moment when Hong Kong Island’s longstanding pivot towards Central fundamentally shifts towards peripheral areas.

    Kowloon

    Grade-A office leasing transactions in September were recorded mainly in Kowloon East and Kowloon West. Demand was driven mainly by the electronics and sourcing sectors.

    Many companies were seeking to reduce rental costs amid market instability. Some opted to downsize or consolidate their offices, or relocate from Hong Kong island to Kowloon.

    We expect office demand in Kowloon to remain fairly stable for the rest of the year, along with continued decentralisation.

     

    Residential

    Political uncertainty and an economic slowdown continued to dent residential market sentiment during the month. The latest Land Registry data shows that overall sales volume reached a new low in 2019, shrinking 15.6% MoM to 3,447 units in September.

    The Special Rates on vacant first-hand private residential units proposed by the government has gone through the first reading in October. Supply in the leasing market is expected to increase, putting downward pressure on the rental market in the short run. For the sales market, to avoid paying the tax, some developers implemented flexible and longer payment plans to attract potential buyers.

    Meanwhile, poor buying sentiments was lifted after the Policy Address when the mortgage requirement for first time buyers were relaxed. Some homeowners in the secondary market have promptly revised their asking prices.

    Looking ahead however, we expect the various headwinds to continue to curb buyer confidence. Nonetheless, the new initiatives of easier mortgage rules should provide stimulus to drive property transaction prices and volume in the short term.

     

    Retail

    Hong Kong’s retail sales fell for the seventh consecutive month in August. According to government figures, total retail sales value registered a tremendous drop of 23% YoY, the largest-ever YoY decline for a single month, even worse than the record in September 1998 during the Asian Financial Crisis. The unrest also resulted in an abrupt downturn in tourism, with a 42.3% YoY drop in Mainland visitor arrivals in August.

    Shopping mall landlords and high street shop owners have adopted various measures to help their tenants cope with the current tough times. With no resolution in sight, we expect local consumption sentiment to remain weak and the number of inbound visitors to continue to drop.

    The retail environment in Hong Kong is expected to be extremely challenging during the remainder of the year despite the upcoming festive season.

     

     

     

    Video

    Organised by the Hong Kong Trade Development Council (HKTDC), the third edition of DesignInspire is returning on 5-7 Dec 2019. Paying tribute to traditional culture and craftsmanship, interesting projects and exhibits that reflect traditional wisdom will be showcased in the fair.


    Osmo natural oil wax based wood finishes – no job is too big or too little

     
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