Hong kong property market remains robust

Photo credit: Xopher Lance

The Hong Kong property market was robust in August, according to Knight Frank.

The firm's latest report shows that office property sales were buoyant, while leasing activities were notable in non-core business areas. Residential sales also jumped in the absence of stringent measures to suppress price growth and the retail property sector remained vibrant with the continual influx of Mainland tourists and the landmark opening of the Hysan Place shopping mall in Causeway Bay.

Indeed, the appetite of investors for buying offices showed no signs of abating last month. While the transaction volume remained stable, the market continued to see major deals being concluded, particularly in Kwai Chung. On the leasing front, major leasing deals in the month mainly took place in non-core districts.

"We expect the rent gap between core and non-core districts to continue to narrow over the rest of the year," commented Thomas Lam, Director and Head of Research, Greater China. "Looking ahead, we expect Central landlords to remain flexible in their asking prices, amid diminishing office demand in the area. Rising vacancy rates are likely to drag down Grade-A office rents in Central by 5-10%, during the second half of 2012."

The opening of Hysan Place added 450,000 sq ft of prime retail space to Causeway Bay, after a long period of limited new supply in the district. Tenants took advantage of the opening of this new mall by securing street shops nearby. Given limited supply and continued expansion demand, we expect retail rents in core locations to continue to grow, albeit at a slower rate of about 5% over the next 12 months.

Hong Kong's luxury residential property market, meanwhile, is expected to continue growing in 2012, adds the report. At the end of August, the Hong Kong government announced ten measures to increase housing supply in the short to long term, but Knight Frank predicts the immediate impact will be limited as only about 1,000 units will be added to the market in the short term.

Lam added: "We have revised our forecasts and expect luxury residential prices to rise by up to 10% by the end of the year, while mass residential prices could increase by up to 15% over the same period. However, a price correction could be witnessed from 2013 onwards, when supply starts to increase notably."