Hong Kong Wen Wei Po (By Leong Yuet Kam)
Under the internal and external problems of the escalation of the Sino-US trade war and the continuing violent demonstrations in Hong Kong since June, the demand for commercial buildings from users and investors has become weak, and the rental and selling prices of commercial buildings are also suppressed. According to the report of "Business Building Express" published by the Midland Industrial and Commercial Shops Research Department, the rent and sale prices of indexing Grade A and B commercial buildings in July all fell monthly, which is the first time in nearly three and a half years since February 2016. Among them, the price of indexing Grade A commercial buildings fell 1.1% monthly, which was the worst.
The report points out that, the price of indexing Grade A commercial buildings decreased by 1.1% monthly in July, there into Queensway dropped 4.5% by month and Tsim Sha Tsui dropped 3.4% monthly, with above two were the districts had the biggest drop, while the rent for overall Grade A commercial buildings declined by 0.7%. The sale price of indexing Grade B commercial buildings dropped by 0.2% monthly and the rent fell by 0.6% monthly. The above four indicators were all recorded decline monthly, which is the first time since February 2016.
Renting business increased by 8% monthly.
Investors generally take a wait-and-see attitude seeing the market climate is not good, so the office trading continues to hover at a low level. Among the 50 leading Grade A commercial buildings, only 1 transaction was recorded in Hong Kong Island last month, the lowest in nearly seven months, and only 6 cases were recorded in 50 leading Grade A commercial buildings, a new low in nearly five months.
Although the renting cases for large-scale Grade A commercial buildings decreased significantly recently, the renting pace of small units is still maintained. According to the report, there were 469 cases of office renting in Hong Kong last month, an increase of 8.1% per month.
The Chief Operating Officer of industrial and commercial shops and Director of Commerce Department of Midland, Yung HungCheung points out that, although the Sino-US trade war had eased in July, but Hong Kong political events continue to heat up, making the market to dull, and not only the trading volume is in low level, but also a few owners are willing to decrease prices to sell recently, dragging down the prices of Grade A and B commercial buildings.
He believes, as the United States began to impose a new round of tariffs on China and listed China as a currency manipulator, it had a significant impact on the global investment market, and the commercial buildings market will hardly be improve this month, with the continuation of political events in Hong Kong and the process of Brexit becoming the focus in the future. However, due to the strong ownership and abundant market funds, it is believed that office prices will not fall significantly in the second half of the year.
In fact, 《Premium Office Rent Tracker》, a high-end office tracking index published by Jones Lang LaSalle yesterday showed that, Hong Kong Central District remained the world's most expensive office market for the fifth consecutive year in the first quarter of this year, with annual rental costs reaching USD340 per sq ft (average monthly HKD221 per sq ft), but the rents for high-end office buildings in Mainland cities have risen dramatically and the rents gap between the two sides has narrowed. Beijing Financial Street ranked the third with West London this year from the fourth last year, with the rental cost have risen from USD189 per sq ft per year in the third quarter of last year to USD195 per sq ft per year in the first quarter of this year, an increase of 3.2%, 0.6% higher than that recorded in Central Hong Kong. 。
The sq ft rent in Hong Kong Central District ranked the first of the world in the first Quarter.
The Head of the Commerce Department of Jones Lang LaSalle, Bau AhLik expresses, in the past six months, the leasing business in Hong Kong Central District was dull, and the high rent was due to the very low vacancy rate, which made it unnecessary for owners to reduce rents substantially to rent out the vacant units. Most leasing deals are concentrated in neighboring areas such as Quarry Bay, since these areas are not among the top 10 most expensive office markets in the world and have significantly lower rents than Hong Kong Central District.
The Senior Director of the Hong Kong Commerce Department of Jones Lang LaSalle Bank, Yim WaiChing expresses, Hong Kong remains one of the most attractive financial centres in the world, but it should not be overlooked that the growing demand for mainland high-end office buildings by mainland banking and financial institutions has pushed up the rent of mainland first-class office buildings, resulting in a constantly narrowing rent gap between the core cities in the Mainland and Hong Kong. The rent of high-end office buildings in Singapore's core areas also increased by 7.4% over the same period. The rent gap to that of Hong Kong has narrowed, and the rent has risen from the 16th place in the world last year to the 14th place this year.
The head of the Kowloon Commerce Department of Jones Lang LaSalle, Tang SzeKan points out that, the latest high-end office rent tracking index showed that although the rent growth in Hong Kong Central District was relatively slow, but Kowloon East has jumped from the 31st to the 29th in the ranking of the most expensive office buildings in the world, and the rental cost in the district has risen by 3.6% in six months. 。 This shows that the market demand for high-end office buildings outside Hong Kong Central District continues to grow, and relocation from the core business district is still a major trend in the Hong Kong office market.