Expansions of Businesses The Grade A Office Market in Hong Kong is booming.

Hong Kong's retail resurgence continues to attract investors.

According to JLL's latest Property Market Monitor, net take-up in Hong Kong's overall office market reached 68,800 sq. ft in November 2017, with an average monthly rent of HKD 71.7 per sq. ft, up 0.3 percent from October 2017. In the Grade A office market, the overall vacancy rate fell to 4.8 percent from 4.9 percent in October. doha house

The financial services industry's expansion requirements continued to drive leasing demand. Ping An Bank reportedly leased 13,900 square feet at One Exchange Square in Central, expanding from offices in the Bank of America Tower, while LGT Group reportedly leased 27,800 square feet at Two Exchange Square.

Rents in Central increased by 0.3 percent month over month, owing to a 0.6 percent increase in Grade A3 offices, while the vacancy rate remained below 2%. On the back of restricted vacancy within the Millennium City portfolio, rents in Kowloon East increased for the second month in a row, rising by 0.4 percent month over month.

JLL's Head of Hong Kong Markets, Alex Barnes, stated, "The vast bulk of demand in Central Asia is driven by Chinese financial service organizations. The driver of the Central Office market in 2018 will be demand from Chinese corporations."

Investors continue to purchase into Hong Kong's retail market, which is still recovering. Link REIT sold 17 non-core retail centers (about 1.2 million sq ft, IFA) and 8.249 parking spaces to a consortium led by GAW Capital Partners for HKD 23 billion, with expected starting returns ranging from 2.3 percent to 3.2 percent.

According to Denis Ma, Head of Research at JLL Hong Kong, "The record price paid for Link REIT's properties demonstrates investors' optimism about Hong Kong's retail real estate market. The purchase also follows a recent trend of PRC investors forming joint ventures to participate in the local property market."

 

An avalanche of new residential units is about to hit the Hong Kong market.

In the next four years, the annual construction of new flats will increase to 22,000 units.

According to JLL's latest Residential Sales Market Monitor, private residential completions in Hong Kong are expected to rise 52 percent between 2018 and 2021, from an average of 14,500 flats per year during the previous four years to an average of 22,000 flats per year.

However, the rising supply pipeline, which is thought to be a key tipping point, is not projected to cause a home market correction right now.

JLL's Hong Kong Regional Director of Capital Markets, Henry Mok, stated, "As new flats on the market continue to be quickly absorbed, developers are likely to accelerate their launches. New developments have so far been able to capitalize on the success of prior ones, with 'Cullinan West', for example, hiking prices by 10% for their second phase of apartments barely six months after the first phase's sales "a stage,"

"Buying sentiment is projected to remain high, owing to the stock market's good performance and Oxford Economics' recent revision of Hong Kong's full-year GDP prediction from 2.8 percent in 2Q17 to 3.5 percent in 3Q17. Even though the city's unemployment rate was barely 3% in October, the lowest three-month period number since February, hiring aspirations are upbeat "since 1998," said JLL's associate director of research department, Ingrid Cheh.

The consortium of Sino Land, K Wah International, Wheelock Properties, SEA Holdings, and Shimao Property paid a record-breaking HKD 17.3 billion for a residential property in Cheung Sha Wan in a recent public land sale. Developers, according to Cheh, are optimistic about the market and may continue to bid aggressively for prospective land chances.

Year-to-date, capital values of mass residential properties have increased by 13.1 percent, on course to increase by 15 percent for the full year. In 2018, Mok anticipates growth to stabilize at 0-5 percent.