According to a report by JLL’s latest Property Market Monitor, the property investment market in Hong is continuously hitting new heights since last year, which is also riding on strong global investor interest.
A total of four en-bloc office buildings were sold for a total consideration of HKD 14.8 billion in 2018, which is about 17% higher than last year.
The en-bloc sale of 18 King Wah Road drew the most attention, setting a new record for the largest office transaction in Hong Kong East.
Decentralization remained as a key theme playing out among office tenants in the leasing market. The spotlight and the focus of leasing activity was on Hong Kong East and Kowloon East. Here tenant decentralization and consolidation requirements underpinned demand. Net take-up in the overall market amounted to 209,900 sq. ft till date. The net absorption in Central reached 33,000 sq. ft. as diverse tenants requested room for expansion.
“The broadening gap between rents in Central and emerging core business districts will add momentum to decentralization. We expect Hong Kong’s Grade A office market rentals to continue to trend higher, rising by up to 5% in 2018, with the support of the outbound growth of Mainland Chinese companies. Central will continue to outperform the overall market as demand competes for the pockets of space that exist,” reports Alex Barnes, Head of Markets at JLL.
On the back of a tightened vacancy environment, office rents in Central advanced by 0.7% m-o-m in January. There was a rise in rents in Hong Kong East region by 0.8% m-o-m, driven largely by increasing demand at the top-end of the market.
“The strong pricing achieved in the government sale of the Murray Road Car Park in May last year is now starting to permeate through the broader office market as investors reset benchmarks. With local money also flowing into the market, the record high prices being set in the market are no longer relying solely on PRC buyers. We expect capital values to rise a further 5-10% in 2018 even with interest rates set to rise further,” asserted Denis Ma, Head of Research at JLL.
The sentiment remained upbeat buttressed by record high land sale for government sites in Kowloon as well as strong gains in the local stock market, in the city’s residential market. The mass residential properties’ capital values raised up by 0.9% m-o-m in the first month of 2018 following to an increase of 1.3% m-o-m the previous month.