No fear of raising interest rates mansion more fierce agent material property prices rose 5%
2017 is the bumper year for the property investment market in Hong Kong. The latest report from Knight Frank forecasts that the Federal Reserve will raise interest rates three times this year. Although Hong Kong may follow the US rate hike but the rate hike is mild, Hong Kong Property prices will not have a significant impact, and it is expected that first-hand residential property prices will rise 5% this year, while luxury property prices will rise 8%. Last year, more than 420 billion yuan was invested in property and land
Colliers International also released a report yesterday. It is expected that the property market in Hong Kong will continue to be active in 2018, and property prices and rents will continue to rise. According to the statistics, in the past year, institutional investors bought a total of more than 54 billion U.S. dollars (422.1 billion U.S. dollars) of various properties and sites in Hong Kong.
In respect of the industrial property market, the report is expected to usher in a new growth momentum in 2018 and the market is focusing on the revitalization of industrial buildings. As more industrial space is activated, competition in the remaining limited space will be even more intense, driving further rental growth rise.
Colliers report pointed out that the office rental market, Hong Kong Island office rental will benefit from limited new supply and strong demand, especially in Central, the rent will be maintained at high, and Quarry Bay and Wong Chuk Hang Rental growth will accelerate. In the Kowloon office market, the report predicts rents will rise by 1% to 3%.
The mainland funds go after the turn of the whole property
The report also pointed out that in 2017, the direction of capital investment in the Mainland will shift from the main investment in land in the first quarter to the investment in stratified or full-scale office properties that have already been developed. Colliers International predicts that due to the desire of both local and Mainland developers to establish sustainable land reserves, the competition between the two will further push up land prices. Confidence in economic growth, sustained negative negative interest rates and continued inflow of funds from the Mainland will support the sustained growth of the property market in Hong Kong. However, we must guard against rising interest rates and the tightening of liquidity in Hong Kong due to external factors such as the tax reform in the United States.
In addition, the Knight Frank report states that Grade A office rents on Hong Kong Island continued to rise in 2017, with the highest increase in office rents in Admiralty and Sheung Wan, up 11% and 9% respectively year-on-year. Against the background of supply shortage and demand persistence, I believe Central Grade A office rents will increase by 2% to 5% this year.
Knight Frank refers to the slowdown in the leasing market of office buildings in Kowloon at the end of 2017. The transactions mainly involved the fine-size office buildings at Kowloon East. Tenants were mostly professional service and procurement companies while the Kowloon Central and Kowloon West office markets remained stable. Looking forward to 2018, Knight Frank expects rents in Kowloon will decrease as the market absorbs vacant space. It is estimated that the rents of Kowloon East office will be flat in the first quarter of this year and rebound in the second quarter. Knight Frank report also believes that although the retail sales in Hong Kong pick up, due to the lack of retailers in Hong Kong expansion and stationing in Hong Kong’s large-scale projects, shops leasing activity will continue to slow down, it is expected this year, prime street rent will fall further 5 % To 10%.