In the midst of political unrest in Hong Kong,

 

developer bids for the Kai Tak site have dropped by 67%.

In 2020, land prices in Hong Kong will begin to fall. doha house

According to JLL's latest Residential Sales Market Monitor Study, the average number of bidders for residential sites in Kai Tak fell by 67 percent from two years ago to just 5.5 in 2019. Developers have been more selective with their land acquisitions as a result of this.

 

When the tender for the residential site (NKIL 6554) at Kai Tak was declared on November 13th, it received four bids. This, along with NKIL 6577, which sold in July, is the smallest number of bids received among residential sites sold in the area so far. This year, the total number of bidders for residential sites in this region fell to 5.5, down from 6.5 in 2018 and 16.3 in 2017.

 

JLL's senior director of Capital Markets, Henry Mok, said, "This is due in part to an increase in the number of consortiums bidding for government property, especially for larger-scale projects. However, given the market's downside risks, it's clear that developers are attempting to reduce investment size and risk."

 

Cathie Chung, JLL's senior director of research, added, "The Kai Tak site (NKIL 6554) was sold for HKD 15.95 billion to a consortium that included China Overseas Land and Investment, Henderson Land, K Wah International, and Wharf Growth. The cost of the accommodation was 27% less than the cost of an adjacent site (NKIL 6553) five months prior "hs ago," she says.

 

"In the months of August to October, Hong Kong's unemployment rate increased to 3.1 percent, indicating early signs of labor market weakness. Furthermore, the city's mood has been affected by the uncertainty surrounding the new political situation. As a result, in the short-to-medium term, developers are likely to follow more accommodating bidding and pricing strategies, resulting in a drop in land prices "she continued.

 

Hong Kong's political unrest is having a negative impact on the local office market.

The vacancy rate in Hong Kong's offices has reached a five-year high.

According to JLL's latest Property Market Monitor Study, the combined office vacancy rate of Hong Kong's traditional business districts, which include Central, Wanchai/Causeway Bay, and Tsimshatsui, rose above 3% for the first time in 5 years in August 2019, due to weakening corporate leasing demand fueled by local political unrest, protests, and economic uncertainty.

 

The office rental demand fell for the third month in a row in August, dropping 1% month over month. Since peaking in June, Grade A office rents have fallen 2.2 percent. Bank of Singapore officially leased an entire floor of 16,600 sq ft at The Gateway Tower 6 in Tsim Sha Tsui, relocating from offices in Central, in one of the more notable leasing transactions. As tenant decentralization remained high, Hong Kong East was the only office submarket to see growth, with rents up 1.5 percent m-o-m.

Last month, the overall market saw a net withdrawal of 167,300 square feet as space vacated by decentralizing tenants returned to the leasing market. New lettings in Central fell by 72 percent year over year, resulting in a net loss of 62,000 square feet.

According to Alex Barnes, Head of Markets at JLL Hong Kong, "Because of continuing global and local economic uncertainties, many businesses are deferring expansion plans. As a result, we expect vacancy rates in traditional business districts to rise even further, putting downward pressure on office rents."

In the industrial market, the US-China trade war continues to have a negative effect on trade through Hong Kong, with imports down 8.7% y-o-y in July 2019 and exports down 5.7 percent.

 

Denis Ma, Head of Research at JLL in Hong Kong, also had something to say about it "Tenants took a wait-and-see approach to real estate plans due to the volatile market conditions, which slowed leasing operation. However, there is still a need for storage. Tesla is said to have rented an entire floor at the China Merchants Logistics Centre in Tsing Yi, committing to 160,000 square feet of space for the storage of newly imported vehicles."