Ask the Experts
The experts weigh in on some questions that surround Hong Kong real estate.
Alot has changed since December, and so with a full quarter in the rearview mirror and the mid-point of the year fast approaching, we asked the pros some questions that have been cropping up—anew or again—in real estate.
What happened to this year’s 10, 15 or 20% price correction?
As of March, Hong Kong property prices have regained 6% of the value they started losing last July, which led to predictions of a major correction this year. But Hong Kong's residential market rarely behaves as expected, and is once again flirting with peak pricing. What happened? “First of all the market here is sentiment-driven. Pent up demand is strong. Residential prices peak again and again, and people who want to buy will monitor the market very closely. When the trade war broke out, transaction volumes froze, and those pent-up buyers switched to ‘wait and see' mode. And volumes have an impact on prices,” explains Rosanna Tang, Colliers' head of research, Hong Kong and Southern China. “What's happening now is the trade war news have been absorbed by the market and another rate hike has been delayed. All this has put a positive spin on the market. There are more primary sales launches and developers are getting more creative with buying plans. So more activity means that prices are restoring.”
Is co-living the new serviced apartment?
With rents and prices climbing and not enough public housing to meet demand, Hongkongers are actively seeking
Hong Kong's residential market rarely behaves as expected, and is once again flirting with peak pricing.
alternatives. For a time, serviced apartments filled the gap in the rental market, but now co-living is gaining traction—fast. The flexibility, ease, sociability and above all affordability that co-living offers appeal to young professionals, as does the single-fee structure. Could increasingly lifestyle-forward co-living properties muscle in on the serviced apartment market in the coming years? “Most certainly,” says Denis Ma, head of research at JLL in Hong Kong. “The past 18 months have seen a significant shift in the coliving sector as the success of new schemes is proving that the sector is moving away from affordable housing and more towards a lifestyle choice. We are increasingly seeing a lot of new schemes coming to market where the ‘rent' is on par with units in the leasing market as well as serviced apartments. This shift in the market is being driven by new schemes that have high quality fit-outs and solid community platforms. We have even
seen one operator lease out a serviced apartment building to operate as a co-living scheme with the community aspects being digital. This may be a stretch, but it does show how far the market has come in such a short period of time.”
Is the high-speed rail link doing its job for the office sector?
A great deal was predicted for the opening of Hong Kong's high-speed rail link (XRL). It would boost the retail sector. It could form part of a solution to the SAR'S housing shortage. It would prop up the office market through mainland demand. “Prior to the opening of the High Speed Rail, the market had been expecting the new rail to boost the rental and price of offices in Kowloon, especially in Tsim Sha Tsui,” states David Ji, director, head of research and consultancy, Greater China for Knight Frank. Based on this quarter's data, that hasn't happened. With Central still posting vacancy rates of 1.5% and fewer transactions in Kowloon in February, rents are steady. “We did not see significantly stronger leasing demand for office space from mainland financial firms after the opening of the XRL … This link has so far had limited impact on commercial properties on Hong Kong Island.”
Is Asia’s hotel industry ready to go fully mobile?
In late 2018, Atlanta-based design studio Radical Innovation, created to foster innovative architecture, revealed the winners of its annual awards. Topping the list of progressive travel concepts was Aprilli Design Studio's Autonomous Travel Suite, an integrated driverless transport and compact accommodation unit. Outfitted with basic sleep, work, and washroom facilities, the ATS is geared for optimised travel time. Complemented by a hotel chain (for docking and suite extension) and mobile app, the ATS is the kind of concept that has the potential—like Airbnb—to disrupt the hotel industry. “The goal of our Radical Innovation community is to create entirely new segments of the travel and hospitality industries,” says John Hardy, CEO of The John Hardy Group and Radical Innovation founder. “The Autonomous Travel Suite is the perfect example of this—utilising sustainable technology as a travel solution that best serves the consumer of tomorrow.”