Record Grade-A Office Prices In Hong Kong

In their latest monthly report on the Hong Kong market Knight Frank found in May, both the Grade-A office sales and leasing markets remained robust. In the residential market, the number of sales transactions rebounded for two consecutive months, despite the implementation of new mortgage measures in February. Meanwhile, the retail property leasing market remained subdued, except for a few transactions in prime retail spots.

Grade-A Office

Hong Kong’s office sales market remained heated in May, with numerous major transactions being recorded in the month. For example, a high floor at Nine Queen’s Road Central sold for approximately HK$480 million or HK$34,861 per sq ft, a record-high unit price in Hong Kong.

In the leasing market, with abundant available space in Kowloon East, David Ji, Director, Head of Research & Consultancy, Greater China at Knight Frank expects office rents in the area to experience mild drops in the coming months, although leasing activity will remain active, given robust demand.

In May, China and Hong Kong regulators jointly announced the ‘Mutual Fund Recognition Scheme’, this arrangement is expected to boost office leasing demand in Hong Kong from related firms, such as funds, banks and others associated with the asset management industry.


The number of residential sales transactions—after having dropped to 4,329 in March, affected by the credit tightening implemented in February—has since rebounded for two consecutive months, reaching 4,549 in April and 5,168 in May.

The number of mass residential sales transactions worth below HK$10 million rebounded to 4,444 in May, but was still lower than the over-5,000-levels recorded in the first two months of the year. Meanwhile, the number of luxury residential sales worth HK$10 million or above exceeded 700 in May—the highest level thus far in 2015—reflecting a shift of some buyers from the mainstream to the luxury segment, as the government’s latest measures target small to medium-sized homes.


The retail sales value fell another 2.2% in April from a year earlier, with the fall continuing to be led by the sales of the government’s classification of ‘Jewellery, Watches and Clocks and Valuable Gifts’. The Chinese government recently announced tariff cuts on a number of imported consumer goods. Although the move will narrow the price gap of these products between Hong Kong and the Mainland, the products are still cheaper in Hong Kong. Coupled with other advantages of shopping in Hong Kong, the Mainland tariff-cuts are expected to have limited impact on Hong Kong’s retail sales.

Amid a challenging retail environment ahead, Ji expects prime street shop rents to drop a further 5% in the second half of 2015. Shopping centres will remain relatively resilient, with prime mall rents expected to remain flat and non-core shopping centre rents to slightly increase over 2015.


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