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Remarkable Rebound For HK Property Sales, Uncertainty Remain

May 7th, 2012 · No Comments

The residential property market in Hong Kong witnessed a remarkable rebound in sales volume with prices become stable last month. This is based on the  March 2012 market review from Knight Frank.

Other encouraging factors include the lack of additional regulatory measures in the 2012/2013 Budget and a low interest rate environment, the report further says.
 
According to the Land Registry, the number of home sales grew 10.7% month on month to 3,884 in February, the first rise since November 2011. Nonetheless, sales of luxury homes valued over HK$10 million decreased a further 23.6% to total 294.

Sales in the secondary market revitalized in February, with some transactions allegedly having closed at record breaking prices. The average luxury home price increased 0.6% in February, led by growths of 3.6% in Pokfulam and 0.6% in Mid-Levels.

The primary sales market persist to obtain a good response. A number of new developments were launched and recorded hopeful sales results.
 
On the leasing front, transaction volume stayed low. The inclusion of luxury flats for rent remained weak following waves of layoffs in a number of financial institutions, the report further reveals. Some landlords were willing to lower asking rents just to ensure tenants and luxury rents decreased 1.3% month on month.

‘Looking ahead, uncertainty in the Hong kong  property market is likely to remain given the slow progress in solving the European sovereign debt crisis, despite the injection of liquidity from central banks worldwide. Meanwhile, high oil prices resulting from unrest in the Middle East will threaten the global economic recovery,’ the report says.

‘In light of these issues, residential sales may dip again in the coming months, while the rental market will remain lukewarm. We believe both luxury prices and rents are likely to fall during the year,’ it adds.

The office market remained comparatively quiet with ambiguity in the global economy remaining. With a lot of firms facing static budgets, demand for office space, mainly in Central, continued to shrink. Companies, chiefly those from the financial sector, scaled back their operations, leading to a rise in surrender cases, the report reveals.

‘With major landlords becoming more flexible during lease negotiations, office rents dropped a further 2.1% in February month on month, following the 1% fall in January. Central led the rental decline with an overall drop of 4% and rents in its premium buildings falling 4.4%. Admiralty also saw rents decline 2.4% in the month.

Kowloon East, for the time being, continued to outperform, as most quality office spaces were absorbed in the midst of severe competition among tenants searching for more affordable options.
 
Availability was on the whole tight in Grade A buildings near MTR stations, bringing down the overall vacancy rate in this area to less than 9%.

‘Looking forward, companies are likely to become more cost sensitive and the number of tenants surrendering existing leases is expected to rise. Landlords are therefore likely to exhibit even greater flexibility in the short term,’ says the report.

‘We expect Grade A office rents in Central to drop 10 to 15% in the first half of 2012. Office rents in core business districts will remain relatively soft until the global economy shows signs of emerging out of recession,’ it adds.

 

 

 

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