Jones Lang LaSalle is optimistic that industrial construction prices will rise 15% this year.
The property market has improved significantly this year, and the residential market has taken the lead, but the large-value property investment market is still in a waiting stage. Zeng Huanping, managing director of Jones Lang LaSalle, believes that the investment market will go up in the second quarter. He is most optimistic about the industrial property that is driven by the revitalization policy. He believes that the cost will rise by 10% to 15% during the year. Among them, the most suitable conditions for the construction of the Chaiwan Industrial Park.
Zeng Huanping quoted Jones Lang LaSalle’s research department as saying that the total transaction value of investment property transactions in the first quarter was 20.2 billion yuan, which was 13.3% lower than the 23.3 billion yuan in the fourth quarter of 2018, and a drop from 43 billion yuan in the same period last year. 53%, reflecting a weak investment climate.
However, after the Lunar New Year, the residential property market has clearly turned upward. Zeng Huanping pointed out that as the United States announced that it would no longer raise interest rates, and the Sino-US trade consultations became more optimistic, the property market became clearer and thus reversed the decline. He is optimistic that the investment property market can follow the pace of the residential market, and trading rebounded in the second quarter.
He thinks that among the various types of investment properties, the industrial buildings are worth more. Since the Chief Executive, Mrs Carrie Lam, proposed the “Revitalization of Industrial Buildings 2.0”, it can rebuild 20% of the floor area under the new policy. Successful application cases have made the use of industrial buildings more flexible. He expects that the price of industrial buildings will increase by at least 10% to 15% this year, and rents will increase by 10%.
Other investment projects, such as office buildings, Zeng Huanping believe that the current cost is too high, and the Grade A office return is less than 2%. However, this year’s rent is “hard to get on again” and the return is difficult to increase. It is estimated that the rental price will only be stable. “This year’s office building Tudor will be a special market for generosity.” As for shops, such as online shopping, the rent is difficult to return to the peak, and the investment value is relatively low.
Chai Wan District is still low in water
Zeng Huanping threatened that although individuals are optimistic about the industrial market, “but to invest, it is necessary to pick a region with a low base and a high appreciation water level.” In the past five years, he was optimistic about the Wong Chuk Hang Industrial Building. So far, the rental price in the area has risen by 30%, and the price of the layered industrial building has risen above 10,000 yuan.
“In the industrial zone that is still low in water, there is only Chai Wan left in the urban area.” Mr Tsang said that in order to purchase a reproducible industrial site, the price of each floor of Kwun Tong and Cheung Sha Wan (about the floor price) should be about 7,000 yuan or more, and Wong Chuk Hang would be more than $10,000. It is too expensive.”
On the other hand, the existing industrial sites in Chai Wan, such as the Chi Tong Cheong Industrial Building at 4 and 6 Fung Yip Street and the two industrial buildings at Chi Wing Cheung Industrial Building, have a market value of about $2.5 billion. With a floor area of more than 360,000 square meters, the floor price is about 6,944 yuan, which is lower than other industrial sites in the urban area. It is expected to be favored by medium-sized and even large-scale developers.
He pointed out that Chai Wan is a mature area, but it has fallen behind the market in recent years because there is no new construction in the area. However, the former CMB Depot near Chai Wan Industrial Estate will be developed into a large-scale residential and commercial complex. In addition, new public housing and green housing will be completed one after another. The population and supporting facilities will increase, which is expected to lead to the transformation of Chai Wan Industrial Zone. . He believes that the industrial buildings in the area are expected to catch up in the next five years.