Downward Home price pressures in Hong Kong are still present in mid-2016.

 

The recent stabilization in residential sales was only temporary. According to the Hong Kong Residential Sales Market Report by global real estate consultant JLL, recent indicators of stabilization in Hong Kong's residential property sales do not indicate the property market has turned a corner.

Home sales reached an 11-month high in May 2016, thanks to improved market optimism. According to Land Registry data issued in June, the number of residential property transactions in May increased by 0.7 percent year on year to 4,620, despite the total value of home sales falling by 20.3 percent year on year to HK$32.6 billion. property for sale in qatar

The primary sales market, which accounted for 1,538 transactions, remained in the spotlight, with developers attaining impressive sales velocities at newly announced projects. The rise in secondary residential capital values can be linked to three factors: ostensibly lower inventory pricing, a lower expectation of an interest rate hike in the second half of the year, and a rise in secondary residential capital values. The 0.9 percent month-over-month increase in the capital value of secondary residences in June boosted buyer confidence.

Despite recent price stability, the market is expected to confront rising negative pressure. With a slew of large-scale projects in the pipeline, including the 1,128-unit Grand YOHO Development (Phase 1) in Yuen Long and the 640-unit The Met. Blossom in Ma On Shan, developers will likely slash prices even further to entice buyers, putting pressure on secondary homeowners to nudge prices down to lock in gains.

"Market mood has shifted more positively in the last two months as a result of exceptional sales at new launches, which has had a stimulating effect on the secondary home market. However, this is merely a brief bounce during a slump, and it does not indicate that the property market is turning the corner "Henry Mok, Regional Director of Capital Markets at JLL in Hong Kong, advises caution. "Because multiple developments with over 1,000 units each will be brought onto the market in August, starting pricing will almost certainly be reduced to entice purchasers, perhaps sending secondary housing prices back down the drain."

 

"There were more transactions ranging between HKD150,000 and HKD200,000 reported in the residential leasing market in the previous few months as landlords have grown more liberal with lease negotiations," said Stella Abraham, Head of Residential Leasing and Relocation Services at JLL.

 

In Asia, the self-storage industry is booming.

 

Despite an uncertain economic situation in Asia, market demand and healthy company activity mean self-storage activity is expanding, according to CBRE Asia's new industry research, Asia Self-Storage: Demographic Changes Drive Demand for Self-Storage Space in Asia. These primary demand drivers are referred to by CBRE as the four Ds: Death, Divorce, Dislocation, and Density.

CBRE's Asia Industrial and Logistics Managing Director, Dennis Yeo, said, " "The self-storage sector is still fundamentally sound, and 2016 promises an early-stage opportunity for investors and operators alike. Favorable demographic and economic trends, such as substantial e-commerce expansion in the region, are driving the industry, which is complemented by low saturation in terms of self-storage per household when compared to other markets globally. The four Ds—death, divorce, dislocation, and density—are all contributing to a long-term trend of rising self-storage demand, especially in developed economies like Hong Kong and Singapore."

 

Yeo went on to say, "Institutional investors are continuing to explore for higher-yielding opportunities in alternative sectors due to the persistent problems in obtaining investible stock in traditional asset classes that meets needed returns in the low yield environment. As a result, we've witnessed an increase in investor interest in self-storage, specifically. Our recent CBRE Asia Pacific Investor Intentions Survey revealed that investors who have already invested in self-storage increased from 7.3 percent to 7.9 percent from 2015 to 2016, and those who are interested in the sector increased dramatically "om 9.2 percent to 14%."

ey self-storage market highlights in Asia: in 2015, self-storage demand in Hong Kong and Singapore was predicted to be 3.4 million sq. ft. and 1.6 million sq. ft., respectively.

Self-storage stock has expanded dramatically in Hong Kong (+20%) and Singapore (+11%) in response to demand, reaching 3.1 million sq. ft. and 1.6 million sq. ft. of rentable space, respectively.

Despite the considerable growth in production, this predicts a stock shortage of 200,000 sq. ft. in Hong Kong in 2015.

The demand and supply dynamics in Singapore are fairly balanced, but the long-term demographic factors are still favorable for self-storage demand.

Density was by far the most important driver of demand in both Hong Kong and Singapore, accounting for 2.3 million sq. ft. of demand and 918,000 sq. ft. of demand, respectively. After then, there came dislocation, death, and divorce.

Hr. Henry Chin, CBRE's Asia Pacific Head of Research, added, "Despite the uncertain economic situation, the basic demand drivers for self-storage and commercial activity are expanding. The manufacturing sector is struggling, which is putting downward pressure on demand for industrial factories, which are the underpinning property for self-storage. This could be a good time for self-storage companies to enter the market and expand. While there are substantial potential opportunities in this sector, there are also areas of concern. The lack of awareness of self-storage in the region, as well as Asia's shorter lease lengths and land tenure than other regions, presents a hurdle."

Chin ended by saying, "Furthermore, there is a scarcity of suitable properties in suitable locations and at reasonable prices, although this is beginning to relieve. As a result, players may consolidate in order to gain scale across several markets."