Despite persistent global economic concern and a collapsing local stock market, co-working operators remained a prominent source of demand in the office leasing market in December last year, according to JLL's latest Hong Kong Property Market Monitor report. qatar dale
Eaton House, a coworking space, reportedly leased 14,000 square feet at Three Garden Road in Central, more than doubling their space there. This also shows that, despite the market's high rental rates, enterprises are still ready to expand in Central.
The seasonal slowdown ahead of the customary Christmas season contributed to a negative net take-up of 94,000 square feet in the overall office market last month. With insurers continuing to relocate into non-core office submarkets, decentralisation is a prominent theme in the office leasing industry. CM Hulder Insurance Brokers is apparently relocating from Sheung Wan and leasing 12,000 square feet at South Island Place in Wong Chuk Hang.
According to Alex Barnes, JLL's Head of Areas, "Rents in the overall market increased by 0.6 percent m-o-m due to tight vacancy in traditional core markets. Tsimshatsui, Hong Kong's tightest market, saw the fastest rental gain in December, rising 1.4 percent month on month. The rental disparity between established core-business areas and developing core locations provides significant rental savings, therefore decentralisation will continue. The upcoming Central-Wan Chai Bypass and Island Eastern Corridor Link will encourage more renters to consider relocating outside of Central. Despite the overall trend of decentralization, central demand remains strong, with fierce competition for high-quality vacancies typical."
Denis Ma, the Head of Research at JLL, added, "The slowdown in sales volumes has had no effect on pricing in the strata office market, with investors continuing to focus on secondary business sites that provide higher returns. The 22/F at Emperor Group Centre in Wanchai was reportedly sold for HKD 160.8 million or HKD 17,248 per sq ft, while a modest flat at Millennium City 3 in Kwun Tong was reportedly sold for HKD 106.1 million or HKD 13,034 per sq ft in one of the most notable transactions. In terms of unit price, both transactions were among the top three highest ever in their respective buildings."
In October, selling rates in Hong Kong's new residential projects fell dramatically.
According to JLL's Residential Sales Market Monitor, first-day sell-through rates for newly launched mass residential projects (with more than 80 units in the initial batch of sales) fell sharply in October 2018.
According to JLL data, first-day sell-through rates for newly announced mass residential projects averaged only 51% in October, compared to a 97 percent average from January to September this year.
According to government data released in October, primary market transaction volumes outpaced secondary market transaction volumes by 23% in September, the first time this had happened since November 2015, when the housing market momentarily slowed.
JLL's Senior Director of Capital Markets, Henry Mok, observed, "Developers have lowered asking prices to clear stocks as an increasing proportion of purchasers adopt a wait-and-see mentality. As a result, the pressure on sellers to cut secondary market prices will only grow. Additionally, developers are actively attempting to capture more demand from the secondary market by offering greater incentives such as loans with higher Loan-To-Value (LTV) ratios up to 80% and aggressive sales strategies such as extended payment periods; in some cases, allowing the buyer to occupy the unit before final settlement "ayment," she says.
JLL's Senior Director of Research, Cathie Chung, stated, "The city's property market is facing greater downside risks due to rising trade tensions between China and the United States, as well as a slowing mainland economy. We anticipate a 15% drop in property prices in 2019, with sales activity remaining concentrated in the primary market ""market," she says.