Hong Kong Wen Wei Po (by Li Zitian)
The political situation in Hong Kong has lasted for more than half a year, affecting the operation of industrial and commercial operations, and bringing a negative impact on the industrial and commercial market. Midland Non-residential Properties Department believes, “local political events” and Sino-US relations will influence the investment environment this year, besides many countries around the world continue the Easing policy, so it is predicted that the non-residential properties rental and sale prices this year will drop and then stabilize, and the transactions in the whole year may rise to about 5,000, but the rental and sale prices of shops in core area are expected to fall another 15%.
Woo Hon-shing: "Political incidents" have a great impact.
The Chief Executive Officer of Non-residential Properties Department of Midland, Woo Hon-shing expresses, the industrial and commercial market last year have experienced a trend of rising first and then falling, besides the transactions plus with rental and sale prices all returned to the stable in the first half-year, but the market shows both falling in prices and transactions in the second half-year due to effect from local political incidents and unstable Sino-U.S. relations. According to the data from Midland Research Department, the total transactions of industrial and commercial shops reached 4,676 last year, a year-on-year decrease of 50.4%, making a record low since 1996, and the turnover was only HKD103.74 billion, a year-on-year decrease of 55.2%. It is worth noting that in the second half of the year there were only 1,748 transactions, a sharp drop of 40.3% from the first half-year, reflecting that the "political incidents" had a great impact on the investment market.
Looking forward to this year, Woo Hon-shing believes that the base was low in the second half of last year, and many countries around the world continued the Easing policy, so there is small possibility of transaction volume and rental and sale prices decreasing again, but the possibility of rebounding even increase, which means the non-residential properties market this year will be stable after falling, also the transactions in the whole year will rebound by more than 5% to about 5,000.
In terms of non-residential properties market, the Director of Midland Non-residential Properties Department, Low Chin-ho points out that the political incidents in the second half of last year made the non-residential properties market the first to be affected, and there were only 1,103 shop transactions in the year, a new low since there was record in 1996. At the same time, the sale prices of shops in core areas plunged by 10.3% last year, and many cases with loss were recorded, with individual loss ranges even reaching 56%. There have been subleases, abandoned or short-term leases in the market.
Low Chin-ho expects that the rental and sale prices this year is estimated to drop by 10-15% due to the shop market in core area affected by the significant decrease in the number of mainland visitors, and also the social movements; Besides it is predicted that the rental and sale prices in non-core area will fall within 5%. Besides, the vacancy rate of the overall street shops in the four core areas last year was 6.5%, an increase of 0.9% point year-on-year, and it is expected to continue to rise to 8-9% this year.
Shared space operators continue to shrink.
In terms of commercial buildings, the Non-residential Properties Chief Operating Officer and Commercial Director of Midland, Yung Hung-Cheung points out that transactions of commercial building were only 962 last year, a new low since there was record, and the transactions in 50 leading index Class A commercial buildings even had recorded of single-digital number in 5 consecutive months. He expects that the trend of "political events" and changes in the unemployment rate will cause office rental and sale prices to fall, and current many shared space operators continue to shrink, affecting office rental, also the commercial building rent may decline significantly in the first half of the year. However, many US-listed China Concept Stocks plan to return to Hong Kong and support the demand for commercial buildings. Besides, several new commercial new projects are expected to be put on sale this year, and commercial building transaction volume is expected to rise by 20%. Yung Hung-Cheung predicts that the sales price of Class A and B commercial buildings will drop by 5% in the whole year, and the rent will fall by about 5% to 8%.
The director of Midland Non-residential Properties Department, Chen Wai-chi expresses the rental and sale prices in the non-residential properties market had fallen off the whole year last year, with the sale price falling by 3.3% and the rent falling by 1.9%.
Chen Wai-chi points out that the impact of the industrial building market is relatively low compared with commercial buildings and shops, and there is also promotion from the revitalization of industrial building policy 2.0, so the transaction volume and sale prices in the industrial market this year are expected to remain flat.