High-power retail sales rose 1% to 3% throughout the year

Real estate service organization Colliers International released the latest Hong Kong second quarter property market research report yesterday. Colliers expects overall retail store rents to increase slightly by 1% to 3% year-on-year, and rent growth from first-tier shops Driven by retail sales in April and May, the company grew by 12.6% year-on-year, mainly driven by sales of jewellery, watches, fashion and cosmetics. It is expected that overall retail store rents will increase by 3% to 5% year-on-year in 2019. Looking forward to the launch of the market in 2018 and 2019, the new retail floor area is 383,700 square feet and 1.37 million square feet respectively.

Strong office demand

As for office market conditions, the overall office leasing market remained strong, with net absorption increasing by 43.4% quarter-to-quarter. It is expected that the average annual net absorption will increase to 2 million sq. ft. between 2018 and 2022, an increase of 130% from 2013 to 2017. The annual supply of Grade A office buildings will increase by 2.5 million square feet between 2018 and 2022, an increase of 76% from the average of the past five years.

Despite the increase in new supply, the expansion of the financial institutions in the Mainland has driven the rental demand in the core business districts. In other parts of Hong Kong, the existing operators of relocation and shared workspaces have actively expanded, driving demand in many non-core areas. Colliers expects overall rents to rise by 7.9% in 2018 and a total increase of 9.6% between 2018 and 2022.