• 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.


    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.


    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.



    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.



    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.




    More Real Estate
    Central’s Grade A office rents record sharpest drop of all submarkets in September
    (23 October 2019, Hong Kong) Central’s Grade A office rents dropped 1.7% m-o-m in September, the sharpest fall among all other business districts and following a 1.9% m-o-m drop across the submarket in August, according to JLL’s Property Market Monitor released today. Rents in the overall market continued to slide in September, declining by 1.1% m-o-m in September. Central recorded the [...]
    MarketView: Retail rents endure biggest fall in 21 years; office rents and investment volume also decline
    CBRE Q3 2019 Highlights Grade A Office The ongoing U.S.-China trade conflict and local sociopolitical unrest continued to weigh on leasing demand in Q3 2019. Net absorption registered just 25,400 sq. ft. while vacancy climbed 0.3% points to 6.5%. The weaker market sentiment ensured rents weakened across most submarkets. Overall office rents fell by 1.7% q-o-q, marking the deepest quarterly [...]
    Berkeley Homes Launches Exclusive Development in Capital of Thames Valley
    (4 October 2019, Hong Kong) Berkeley Homes is launching a brand-new development in the capital of the Thames Valley.  Boasting a prime town centre location, overlooking the River Kennet, this expansive new collection of high specification homes is set to change the Reading property landscape. Huntley Wharf is one of the UK’s most exciting residential investment opportunities – the [...]
    Greater Central rents record largest quarterly drop in seven years amid weak demand
    (3 October 2019, Hong Kong) Grade A office rents in Greater Central softened significantly in Q3 against a backdrop of weak leasing demand in core areas and a continuing trend of MNCs relocating to non-core areas. A slew of pre-leasing transactions agreed well before the social unrest commenced, contributed to an overall positive absorption, but in general, tenants held off committing to [...]
    Vacancy rate in traditional business districts climbs to a 5-year high
    (26 September 2019, Hong Kong) The combined vacancy rate of traditional business districts, which includes Central, Wanchai/Causeway Bay and Tsimshatsui, rose above 3% for the first time in 5 years in August due to weakening leasing demand, according to JLL’s latest Property Market Monitor released today. The rental market retreated for the third consecutive month, down 1% m-o-m in August. [...]
    Social unrest continued to dampen office leasing demand
    (25 September 2019, Hong Kong) Knight Frank launches the latest Hong Kong Monthly Report. In the office market in August, the ongoing social unrest has led to weak sentiments amongst tenants which affected their outlook and business plans. In the residential market, sales hovered at low levels amid market headwinds, with the monthly sales volume reached the lowest in 2019. Meanwhile, the [...]
    Properties at Whampoa Street and Baker Street, Kowloon sold for over HKD 2.137 billion
    (17 September 2019, Hong Kong) The buildings at Nos. 1, 1A, 3, 5, 7, 7A, 9, 9A, 11, 11A, 11B, 11C, 15, 15A, 17, 17A, 19, 21, 21A, 21B and 21C Whampoa Street, as well as Nos. 80, 82, 84 and 86 Baker Street, Kowloon were sold by public auction under the Lands Tribunal under the Land (Compulsory Sale for Redevelopment) Ordinance of the Lands Tribunal this morning to South Crown Development [...]
    K11 ARTUS brings luxurious artisanal living to Singapore at CUSCADEN RESERVE
    (12 September 2019, Hong Kong) CUSCADEN RESERVE is a first of its kind residential collaboration between Singapore luxury property developer SC Global Developments and K11 ARTUS from K11 Group, designed to elevate the concept of artisanal living to deliver a truly unique and absolutely exclusive cultural experience for the residents. The luxurious residence in the heart of the prestigious [...]
    JLL launches Defect Monitoring System app for property developers
    (24 July 2019, Hong Kong) JLL announced today the official launch of its self-developed web-based Defect Monitoring System (DMS) application for properties. The app aims to enhance JLL’s property management services by shortening the time of new property inspection and generation of building quality research, which will help the developers to enhance the building quality as a result. It is [...]