The prices may fall 10% in the second half year since the market sentiment is reversed.
Hong Kong Wen Wei Po (By Yan Lunle)
The transactions of all kinds properties in Hong Kong fall as the deteriorating of the Sino-US trade war. According to the statistics of the agents, the transactions among ten leading housing estates in the past two days were only 3, a sharply drop of 60% compared to the 8 cases before the deterioration of the trade war in early May. The impact on A class office buildings is larger than that of the residential buildings, with 15 transactions were recorded among 50 leading A class office buildings in May, sharply down by 32%, while half of these 15 transactions were made in the beginning of May, showing that the investment has frozen rapidly after the deterioration of the trade war. The industry expects, trading will continue to be sluggish in the short term, and the property prices of A class office building will fall 5-10% in the second half of the year, offsetting the year-to-date increase, so it will not rise or fall throughout the year.
The trade war has deteriorated again, cooling down significantly the A class office building market which had warmed up earlier. According to Midland industrial and commercial shop data research department and Midland business data, 15 transactions among 50 leading A class office buildings were recorded in May, sharply down 32% from the 22 cases in April, a new low in nearly four months. It is worth noting that about half of the transactions in May were made in the beginning of May, before the deterioration of the Sino-US relations, reflecting that the trade war had a certain impact on the commercial building market.
43 office buildings had zero transaction in last month.
During the transactions among A class office buildings, 6 cases were from The Center, up by one time monthly. In terms of districts, Hong Kong Island recorded 6 transactions last month, which means that except for The Center, all the other indicative A class office buildings have not recorded any transaction, which is rare in recent months.
Kowloon District recorded 7 transactions last month and the New Territories recorded 2. In the whole of May, A class office buildings without transaction were 43, a new high in the past six months.
Trading is shelving under uncertain prospect.
The chief operating officer of industrial and commercial shops and business director of Midland, Weng Hongxiang points out that, the trading of A class office building in the beginning of May was still hot following the market warm in March and April, but US President Trump suddenly announced the increase of tariffs on imported goods in the Mainland in early May, colling down the trading in commercial building market.
The managing director of Centaline (Industrial and Commercial), Pan Zhiming also pointed out yesterday that, in the past March and April, the trading of A class office building was active, for example, in The Center, both 22nd and 33rd floors had investors to launch the properties for sale, with totally about 8 properties were sold, which was ideal. But the market sentiment has reversed since the deterioration of the Sino-US trade war, and many negotiations of A class office buildings are shelved, leading the trading sharply down.
He expressed, under the influence of the trade war, the economic outlook has become unclear, and investors tend to wait and see or hope to enter the market at a lower price to balance risks; However, at the same time, the owners are generally more powerful, who are also watching the developments at the moment, so the asking price has not fallen back, resulting in the recent see-saw. He estimated, the dull trading would continue until June and July, and the price would not fall sharply for the time being, also the development of the market will depend on the trend of the Sino-US trade war.
Pan Zhiming analyzed, people who used to purchase A class office buildings in the past mainly are international institutions or companies for self-use, or long-term investors bought for renting, and the change of investment climate will directly affect the trading volume, so the recent trading has dropped significantly.
Poor retail sales hinder commercial shop transactions.
Apart from A class office building, he observed that the commercial shops are also non-residential properties that greatly affected by the trade war, because the trade war also affected the market consumer sentiment, resulting in the poor retail sales in the past two months, which drag down investors’ invest intend on commercial shop.
He pointed out that since this year to May, the prices of A class office building had risen by about 5% to 10%, but in the second half of the year, under the turmoil of the trade war, it was predicted that many owners would stop earning to sell, which would drag down the prices of A class office building, making the rise in the first half year all gone, also the fall in the second half of the year would be 5% to10%, so there would be not change on the A class office building prices in the whole year.