Commuters travel past commercial buildings on a tram in the Central district of Hong Kong on June 21, 2021. (ANTHONY WALLACE / AFP)
Rental demand for office buildings in Hong Kong is expected to improve in the second half of 2021, as the soon-to-be-announced Wealth Management Connect will likely bring a new leasing demand from mainland banks and financial firms, international real estate adviser Colliers International said.
Hong Kong’s real estate market is gradually recovering, and overall investment increased to HK$25.5 billion (US$3.3 billion) in the second quarter of 2021, with investment capital flow into the office sector soaring by 278 percent quarter-on-quarter, according to a new Colliers report.
We expect to see leasing momentum pick up further towards the end of 2021, and the overall rents are expected to fall by 6 percent year-on-year with a slower rate on rental correction.
Fiona Ngan, Head of office services, Colliers International
“We expect to see leasing momentum pick up further towards the end of 2021, and the overall rents are expected to fall by 6 percent year-on-year with a slower rate on rental correction,” said Fiona Ngan, head of the company’s office services.
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Ngan added that the cross-border Wealth Management Connect will likely bring new leasing demand from mainland financial service firms, as they may seek high-quality Grade-A office space around core locations.
The report also showed that retail sales saw a year-on-year increase of 11.2 percent, thanks to the growth of sales in apparel, luxury goods, and electrical goods. Cynthia Ng, Colliers’ executive director of retail services, said that with the higher vaccination rate, the worst is over in the retail sector. “We forecast full-year high-street rents to fall by 3 percent year-on-year in 2021,” Ng said.
Meanwhile, the industrial sector continued to recover and outperformed other sectors, with warehouse rents increasing 1.1 percent in the April-to-June period compared with the first quarter, and now forecast to grow 5 percent year-on-year in 2021, said John Davies, head of Colliers’ Kowloon office and industrial services.
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Davies also recommended investors pay attention to cold storage in the coming three years, given the strong export rebound and rise in food consumption. “This becomes even more appealing when considering the favorable government policy for industrial redevelopment,” including the revitalization program and standard rate measure, Davies said.
In addition, home prices in Hong Kong are expected to rise by 5 to 8 percent this year from 2020 levels, Colliers said.