• Rebounding sales momentum driven by the border reopening

    28 February 2023

    Knight Frank launches the latest Hong Kong Monthly Report. Market sentiment generally improved with the positive impact of the border reopening and better economic outlook.

    However, Grade-A office demand recovery is expected to be slow, and leasing activity has yet to significantly pick up. In the residential market, with the border fully reopened with the Chinese mainland and slowing interest rate hikes, buying sentiment turned positive.

    Both primary and secondary transactions recorded an uptick over the month. The luxury segment was resilient. In the retail market, we remain cautiously optimistic and expect the retail market to show more significant improvement only in the second half of the year.

    Grade-A Office

    Hong Kong Island

    Market sentiment generally improved with the positive impact of the border reopening and better economic outlook. However, demand recovery is expected to be slow, and leasing activity has yet to significantly pick up.

    The decentralization trend continued, as MNCs prioritised cost and operational optimisation. Certain Japanese financial institutions relocated part of their back-office operations to decentralised areas, while retaining their front-office operations in Central.

    There have been more enquiries from Chinese mainland companies for small and medium-sized spaces below 3,000 sq ft. There is still a lack of demand for large-scale units.

    Kowloon

    Office demand gradually picked up in January with the improving sentiment. Leasing activity in Kowloon East remained active, while that in Tsim Sha Tsui improved. The Kowloon market notched up several large transactions in newly built office buildings.

    Renewal cases were also active and supported transactions in indicative buildings, especially The Gateway towers. Looking ahead, we expect more transactions to take place in the coming months with improving market demand.

    Residential

    With the border fully reopened with the Chinese mainland and slowing interest rate hikes, buying sentiment turned positive. Both primary and secondary transactions recorded an uptick over the month. The luxury segment was resilient.

    On the leasing front, more enquiries and home-viewing activity were recorded over the month, driven by an increasing number of foreign and Chinese mainland expatriates returning to the city.

    In the coming three to four years, a record 105,000 new private flats are expected to hit the market, a surge of 10,000 units QoQ, according to Housing Bureau. Looking ahead, with improved market sentiment and buyer confidence, sales activity in both the mass and luxury markets is expected to pick up. Developers are expected to launch new projects and adopt a more aggressive approach by rolling out various incentives to attract potential buyers. Nevertheless, given the abundant private housing supply and unsold units hitting the market, and as all current ‘spicy measures’ being maintained, we expect housing prices to start improving only in the second half of 2023.

    Retail

    In the traditional retail peak season in December and January, although the social gathering restrictions were greatly relaxed, the retail market did not see a significant improvement. The main reasons were that local consumption remained weak amid the economic uncertainty, and the relaxation of quarantine measures for outbound travel resulted in an increase in outbound travel by residents.

    On the bright side, some Japanese brands, especially pharmacies and supermarkets, have been actively expanding their operations. Active expansion of these Japanese brands and the commitment of large shops indicates that the outlook for the retail market and tourism in Hong Kong remains positive, also meaning lower vacancies for large shops.

    Looking ahead, we expect retailers to remain prudent in extending their presence in the market, as they are holding a wait-and-see attitude towards the market situation. The market’s revival will hinge on the return of tourists and how quickly the market returns to normal. We remain cautiously optimistic and expect the retail market to show more significant improvement only in the second half of the year. We expect sales of approximately HK$360 billion in provisionally in 2023, we will revise this figure in quarterly basis as the market varies.

    Download full report here.

    Video

    Z8 Fury G5 | Z by HP


    The Living System | A Short Film by Seven Z Ambassadors | Z by HP

     
    Gallery

    no images were found