Rents in HK of­fice mar­ket seen fall­ing next year

The Star Malaysia - StarBiz - - Foreign News -

HONG KONG: Rents in the world’s costli­est of­fice mar­ket, Hong Kong, may fall for the first time in four years as an eq­ui­ties rout weighs on sen­ti­ment in the fi­nan­cial hub.

Grade-A of­fice rents in Cen­tral and Ad­mi­ralty will de­cline by about 4% in 2019, Col­liers In­ter­na­tional Inc said in a re­port. That com­pares with an es­ti­mated gain of 9 per­cent this year.

De­clines in stocks this year have un­der­mined con­fi­dence at the fi­nan­cial firms that rent more than half of the Grade-A of­fice space in the cen­tral busi­ness dis­trict, the prop­erty bro­ker­age said. Loom­ing in­ter­est-rate in­creases and the U.S.-China trade war will also take a toll on sen­ti­ment, it said.

Of­fice oc­cu­pancy costs in Cen­tral stand at US$307 per sq ft, top­ping Lon­don’s West End and Beijing’s Fi­nance Street, ac­cord­ing to CBRE Group Inc.

Mean­while, more signs have emerged that China’s hous­ing mar­ket is cool­ing, with sales in the sec­ondary mar­ket, land pur­chases by de­vel­op­ers and con­tracted sales at the big­gest builders all fall­ing last month, as these three charts show.

Sales of ex­ist­ing homes, which are quar­an­tined from the gov­ern­ment curbs on the new home mar­ket, last month plunged to a four-year low in 10 ma­jor cities tracked by China Real Es­tate In­for­ma­tion Corp.

Lack­lus­tre sales will likely weigh on ex­ist­ing-home prices in com­ing months, Shanghai-based an­a­lyst Wang Zhao­jin said. In Septem­ber, new-home price growth slowed for the first time in seven months.

Cash-strapped de­vel­op­ers are also pulling back. Land sales in 40 cities tracked by CRIC fell 0.5% in the first 10 months from the same pe­riod a year ago, a sharp con­trast to the pre­vi­ous two years when land sales surged about 40%. With builders fac­ing a record US$18bil of bond ma­tu­ri­ties in the first quar­ter of 2019, the cool­ing in the land mar­ket is set to in­ten­sify.

And it’s no won­der de­vel­op­ers are turn­ing cau­tious. Con­tracted sales at the 100 big­gest builders de­clined 11% in Oc­to­ber from Septem­ber, CRIC data showed, even as some of­fered in­cen­tives rang­ing from free lux­ury cars and hefty dis­counts dur­ing a week-long na­tional hol­i­day. — Bloomberg

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