According to JLL's latest Hong Kong Property Market Monitor Report, decentralization accelerated in July 2016 due to a widening rental disparity between core and non-core office sectors.
Burberry will relocate from Causeway Bay to Swire Properties' Taikoo Place in Quarry Bay, while Volkswagen, another Causeway Bay tenant, will relocate to Billion Centre in Kowloon Bay. cheap rental cars
Last month, rents in Wanchai/Causeway Bay increased 0.3 percent month over month to HKD 62.6 per sq ft, while prices in Hong Kong East and Kowloon East stayed steady at HKD 47.6 and HKD 33.9 per sq ft, respectively.
Leasing activity in Central was slowed by restricted supply and weakening PRC demand, with the overall number of new lettings falling 70% m-o-m. However, due to a constrained vacancy situation, Central's office rentals increased by 0.1 percent m-o-m to HKD 107.5 per sq ft in July. At the end of July, the vacancy rate in Central was barely 1.5 percent.
The Tsimshatsui occupier market rose for the first time in five months in July, owing to domestic expansion requirements from the sourcing and trading industry. Net take-up totaled 11,000 sq ft. Slowing demand and lease expirations returned space to the market in all other major office submarkets, resulting in a net withdrawal of 115,300 square feet in the total office market.
"The transacted office market was seasonally slow in July, despite a number of ongoing negotiations," said Alex Barnes, Head of Hong Kong Markets at JLL. "We expect a pick-up in transactions in lower cost alternatives to Central, most notably Hong Kong East, Wong Chuk Hang, and Kowloon East, for the remainder of the year. Reduction in business costs remains a key theme, and these districts all provide it."
"The leasing market continues to show indications of weakening, with the occupier market falling for the third consecutive month," said Denis Ma, Head of Research at JLL in Hong Kong. "Unlike previous months, however, there were no significant lease expiration in July, suggesting that demand is genuinely slowing."
In 2016, the Prime Asia Development Land Index produced mixed results.
The first half of 2016 had mixed results according to Knight Frank's Premium Asia Development Land Index for H1 2016, a newly established index that calculates the price of prime residential (apartment or condominium) and commercial (office) development land in 13 key Asian cities.
"If the recently passed tax amnesty scheme in Jakarta succeeds, the repatriation of funds, combined with the easing of monetary and macro-prudential policies by raising loan-to-value and financing-to-value ratios for example, could boost demand for prime residential properties," says Nicholas Holt, Asia Pacific Head of Research.
Asia H1 2016 Land Index Results:
In Asia, development land investment volumes in the first half of 2016 were on par with the same period last year.
Residential land prices in the region increased at a slower rate of 1.9 percent in H1 2016, compared to 2.8 percent in the previous six months; however, office land prices increased at a faster rate of 2.2 percent, up from 1.9 percent.
China's land purchases increased by 6.0 percent year over year, thanks to aggressive land purchases by state-owned firms.
In Asia, the volume of cross-border land investment declined by 11.5 percent year over year.
Tokyo had the highest residential index gain in H1 2016, at 16.8%, substantially higher than the runner-up Shanghai (9.6%), while NCR had the lowest, at -9.9%.
Bengaluru leads the prime office index with a 6.1 percent growth in H1 2016, while Singapore is at the bottom with a 4.4 percent reduction.