Commercial rentals, gradually seeing the impact of trade
The trade war has not yet been fully resolved, and the rental of commercial buildings in Central has slowed down. The rents in the Central District and even the whole territory of Hong Kong have slowed down significantly, even slightly. It is believed that the rent will be at a high level for a while.
According to the latest rental trend of DTZ’s commercial buildings, the rents of commercial buildings in various districts in the first quarter of 2019 have not changed much, and the monthly change is less than 1%. It is worth noting that the figures show that the upward trend is slowing down or even slightly falling. The best quality commercial buildings in Central arena. The rent was $165.2 per trip, down by about 0.4% quarter-to-quarter. After the third quarter of 2014, the first quarterly decline in the past five years was recorded. The average rent for the entire commercial building was 77.1 yuan, up 0.2% quarter-to-quarter, the smallest increase since 2016. From several figures, there is evidence of a peak in rents.
Jiasha rent in 5 years, the first quarterly decline
The rental growth of Jiasha has slowed down and even peaked. It seems that it is different from the recent performance of the property market. In fact, commercial rentals are inconsistent with residential or investment markets. Residential and industrial property transactions involve self-use or investment. Prospective buyers enter the market.
As for the commercial tenancy, the agency owner is responsible for judging the business environment. Since the general lease involves three years or more, in other words, the company boss has to assess the economic environment in the next few years before deciding whether to expand or not.
Under the Sino-US trade war, it is inevitable that the pace of institutional expansion will slow down. After all, the incident has not yet been fully resolved. The agency still needs to observe for a period of time. Therefore, the rentals have slowed down in recent months. In addition, the rents of commercial buildings in Central have continued to rise in recent years. The main driving force for the increase is from Institutions in Hong Kong have made great efforts to rent the best quality units at high rents. This rent-selling tide has slowed down since last year. It is believed that it is more or less dragged down by trade wars, and even some Chinese-funded institutions are not in place because of funds. Unsubscribe unit.
Supply of faults
Under the uncertainties of the market conditions, it can be expected that the commercial rental market will remain relatively quiet in the coming months, and the rent is expected to run at a high level for some time.
After a long uptrend, will the rent of commercial buildings be significantly adjusted? The key to the change in rentals in the city is the vacancy rate/rental rate. According to the latest occupancy rate of DTZ, which is currently vacant or about to be vacant, the rent rate of prime commercial buildings in Central is only 4.1%, up by 3.1% from last year’s low of 3.1%, but still at a very low level. The rate of renting is only 7.8%, which is also at a low level. The occupancy rate of the commercial buildings of the big owners is high, even zero, and there is certainly not much room for price reduction, and the opportunity for rent reduction is low.
Another impact on the rental trend is new supply. In the past three years, it has been the peak supply period for commercial buildings. It is estimated that there will still be 2.3 million square feet of new supply this year, mainly concentrated in East Kowloon. However, it is worth noting that many new floors have been reserved for this year’s new commercial buildings. The number of floors to be rented is not too large. In 2020 and 2021, there will be commercial supply faults. It is expected that there will be zero supply next year. In 2021, only About 800,000 baht, according to the annual absorption of about 2 million square feet, it is believed that the demand for supply will be in short supply in the next two years, so the rent is expected to be at a high level.