Hong Kong Monthly
Total Page：16
File Type：pdf, Size：1020Kb
Research December 2012 Hong Kong Monthly REVIEW AND COMMENTARY ON HONG KONG'S PROPERTY MARKET Knight Frank 萊坊 Office Signs of rents bottoming out in core business districts Residential Tough new measures reduced home sales Retail Investors continued to 1 boost retail property sales December 2012 Hong Kong Monthly M arket in brief The following table and figures present a selection of key trends in Hong Kong’s economy and property markets. Table 1 Economic indicators and forecasts Economic Latest 2012 Period 2010 2011 indicator reading forecast GDP growth Q3 2012 +1.3% +6.8% +5.0% +3.8% Inflation rate Oct 2012 +3.8% +2.4% +5.3% +3.4% Unemployment Aug-Oct 2012 3.4%# 4.4% 3.4% 3.4% Prime lending rate Current 5.00–5.25% 5.0%* 5.0%* 5.0%* Source: EIU CountryData / Census & Statistics Department / Knight Frank # Provisional * HSBC prime lending rate Figure 1 Figure 2 Figure 3 Grade-A office prices and rents Luxury residential prices and rents Retail property prices and rents Jan 2007 = 100 Jan 2007 = 100 Jan 2007 = 100 250 190 300 230 170 210 250 190 150 170 200 130 150 110 130 150 110 90 90 100 70 70 50 50 50 2007 2008 2009 2010 2011 2012 2007 2008 2009 2010 2011 2012 2007 2008 2009 2010 2011 2012 Price index Rental index Price index Rental index Price index Rental index Source: Knight Frank Source: Knight Frank Source: Rating and Valuation Department / Knight Frank 2 2 Monthly reviEW The government’s new tightening measures in November reduced residential transaction volume, but prices remained stable. Some investors shifted to non-domestic assets, boosting sales in office and retail properties. Looking ahead, we expect residential prices to experience only minor adjustments, while office and retail prices should see more notable growth with the ongoing impact of the cooling measures. Asking rents in core areas such as Central half of the year. The average Grade-A “showed signs of Prime office office rent fell another 0.2%, after stabilising. dropping 6.6% in the previous ten Interest in non-residential properties months. Rental decline in Central showed no signs of abating this past slowed to 0.8%, while rents in month, as these markets remained non-core districts, such as Kwai Chung free from government intervention. and North Point, increased 3.9% and Office sales stayed buoyant, with 3.3% respectively. ” around 450 transactions in November—20% more than the Asking rents in core areas such as number of transactions recorded in Central showed signs of stabilising, the previous month. following an increasing number of buildings in the area recording A number of major deals involved new satisfactory take-up rates over the Grade-A office buildings in Kowloon past few months due to more flexible East. The launch of Rykadan Capital rentals. In the short term, office rents Tower in Kwun Tong received a strong in the area will continue to be under response, with all available floor downward pressure, as vacant space plates presold within the first week. in major Grade-A buildings has yet to The 28th floor of the building, be fully absorbed. However, this We expect measuring 12,024 sq ft, sold for overhang is likely to be cleared from HK$122.4 million or HK$10,183 per sq the market in the coming months and residential prices ft. we believe office rents may bottom out in the first half of 2013. to remain stable Leasing activity continued to lag “ in 2013, with mild behind that of sales last month, driven mainly by the need to move to less Residential upward or expensive space by tenants, or by downward landlords in Central showing flexibility The government showed its on asking rents. For example, Vision determination to curb the growth of movements of Century reportedly leased a number of residential prices by imposing a series less than 5%. mid-floor units in Two IFC totaling of restrictive buying measures, 10,000 sq ft. An Australian Bank including the implementation of a committed to a 7,400-sq-ft whole floor Buyer’s Stamp Duty (BSD) and in CCB Tower in the same district. extending and intensifying the existing Special Stamp Duty (SSD) on Office rents continued to fall last 27 October. month, but the pace slowed ” considerably, compared with the first The measures reduced residential KnightFrank.com.hk 3 December 2012 Hong Kong Monthly stable over 2013, with mild upward or Over the first ten months of 2012, sales by 19.3%, month on month, to downward movement of less than 5%. visitor arrivals to Hong Kong grew over 7,035 in November. Sales of luxury 15%, reaching 28.4 million. The homes worth HK$10 million or more Potential buyers who cannot afford the number of Mainland tourist arrivals dropped 25.5% to 780. Sales in the high prices, or are waiting for a price surged 23.8%, year on year, to 20.4 primary market were particularly drop, are expected to shift towards the million, representing 71.7% of total sluggish with no new developments leasing market. Landlords, to avoid tourist arrivals. The sustained growth launched last month, while in the ten paying the stamp duties, would tend in tourism continued to support local most popular secondary estates, total to lease out their properties instead of retail businesses and retail sales sales recorded a drop of over 50%. selling them. The leasing sector is value grew 9.9%, year on year, to therefore expected to perform strongly, around HK$362 billion during the However, landlords and developers based on sustained supply and ten-month period. were not willing to offer significant demand levels. Home rents are set to price discounts, given the prevailing increase 10–15% next year. International brands continued to low interest rates and their strong enter or expand in Hong Kong. financial conditions. Luxury and mass Burberry (BRBY.LSS) launched its first residential prices in November still Retail flagship store in Hong Kong, taking up recorded month-on-month gains of a 21,500-sq-ft space in Pacific Place in 0.2% and 1.3%, respectively. The implementation of Quantitative Admiralty. Meanwhile, Gap opened its Easing (QE3) in the US and the new first pop-up store in Harbour City, Tsim Speculators were deterred by the new tightening measures in the local Sha Tsui, and will launch a policies and some shifted their focus residential market continued to help 16,500-sq-ft flagship store in the same to non-residential markets. A shore up the retail property shopping mall by the end of the year. significant increase in car-parking investment sector last month. space transactions was witnessed Looking ahead, we expect after the the tightening policy took Several major transactions were international brands to continue effect. Cheung Kong Holdings recorded in both core and non-core expanding and tourist arrivals to (0001.HK), for example, sold over 500 districts, with foreign and local continue contributing significantly to parking spaces in Festival City in Tai institutional investors actively Hong Kong’s retail sales market. Given Wai in one day, while a number of acquiring quality retail properties for the limited supply of prime retail other developers also put their long-term investment. space, we maintain our forecast that parking spaces onto the sales market retail rents in prime locations will rise in November. Cubus, a 68,000-sq-ft Ginza-type 8–10% in the coming year. building in Causeway Bay, was Despite the uncertainty, land sales reportedly sold to a southeast Asian results were satisfactory last month, fund for around HK$1,500 million. reflecting developers’ confidence in Meanwhile, nine units totaling 4,521 the outlook for the local property sq ft on the ground floor of Argyle market. Two sites in Tseung Kwan O Centre Phase 1 in Mong Kok were International brands and one in Ma On Shan were acquired reportedly sold for HK$415 million or continued to push up at prices that exceeded market HK$91,793 per sq ft. expectations. Lai Sun Development retail rents in prime (0488.HK) outbid five other On the supply side, Soundwill Plaza II- companies to secure Area 68A2 in “shopping locations. Midtown in Causeway Bay Tseung Kwan O at a record-high commenced pre-lease activity in accommodation value (AV) for the November. The 216,865-sq-ft district. The 229,338-sq ft site sold for shopping centre is expected to be HK$2.8 billion, representing an AV of completed in the third quarter of 2013. HK$4,932 per sq ft. Meanwhile, renovation work began in Discovery Park Shopping Centre in ” The number of residential transactions Tsuen Wan and is scheduled for totaled 78,047 in the first 11 months of completion by 2015. The four-phase 2012, a year-on-year drop of 2.6%. Due renovation of this 600,000-sq-ft retail to the limited supply of flats, a low development aims to restructure the unemployment rate and an tenant mix and enhance the inflationary environment, we expect positioning of the centre. residential prices to remain relatively 4 Prime office Table 2 Selected office sales transactions Interests in office properties Tower / floor / Area Price Price District Building showed no signs of abating unit (sq ft) (HK$M) (HK$psf) over the past month. Central World-wide House Mid-low floor 16,693 $400 $23,962 The Sun's Group Wan Chai 30th floor 7,388 $119 $16,107 Centre Rykadan Capital Kwun Tong 28th floor 12,024 $122.44 $10,183 Tower Kwun Tong King Palace Plaza 27th floor 12,682 $122.38 $9,650 Kowloon Tower B / 13th Kwai Chung 24,959 $197 $7,893 Commerce Centre floor Source: Land Registry / Knight Frank Note: All transactions are subject to confirmation.