Investment market remains robust with considerations netting HK$28.274 billion
Property sales volume plunged to a new low in 20 years of 2,802 S&Ps in February, among them 1,807 transactions were residential, while the mass home price took a dive of 12.4% from the peak in last August
A head trick of en-bloc office mega deals in Q1 that netted HK$17.49 billion, or 62% of the total considerations in property investment in the quarter, reflected investors’ continuous optimism on the rental trend.
HONG KONG, March 16, 2016 /PRNewswire/ — DTZ/Cushman & Wakefield, a global leader in commercial real estate services, reviewed today the performance of the residential and property investment markets of Hong Kong in the first quarter of 2016. Property sales volume plunged to an all-time low amid the sluggish market sentiment. In contrast, the property investment market remained robust, with buyers seizing the momentum of interest on office properties to make purchase.
Amid concerns about the sluggish performance of both the Western economies and the local stock market, the number of Sales and Purchase Agreements (S&Ps) for all properties dropped to 3,346 and 2,802 in January and February respectively, surpassing the record during the SARS period in May 2003 and the global financial crisis in October 2008. Among which, residential sales fell to 1,807 in terms of S&Ps in February, practically the lowest level since 1996. Reports of sales in early March indicated a small level of rebound but it was limited to buyers who were after the slew of discounted flats on the market.
As of February, the price index based on selected popular estates fell by 12.4% from the peak level in August 2015. As of March, representative estates such as City One Shatin and Taikoo Shing had a quarterly drop of 6.5% and 6.8% in Q1, whereas the price of a Leighton Hill flat dropped by a smaller margin of 4%.
Mr Alva To, DTZ/Cushman & Wakefield’s Senior Managing Director of Hong Kong cum Head of Consulting Services, Greater China, commented, "The fact that home sales going below the benchmark of 2,000 S&Ps in a single month spells out buyers’ worry of the market going into continuous decline. Given the substantial drop in general pricing and the strong demand from end-users, there is already slight improvement in sales volume. However, whether home price can begin to stabilize is questionable, as the outlook of the regional economy is still clouded."
The sluggish sentiment however did not extend to the property investment market. Following a vibrant year in 2015 when total investment considerations reached HK$117.044 billion, which is the best record since 2006, investors continued to seize the chance to snap up quality properties available on the market in the first quarter. This has been most notable in the office sector. Including the transactions of the TID Tower in Mongkok, Dah Sing Financial Centre and SBI Centre, en-bloc office sales accounted for HK$17.490 billion, or 62% of the total considerations of HK$28.274 billion in Q1.
Mr Kenneth Yip, DTZ/Cushman & Wakefield’s Director of Investment & Advisory Services in Hong Kong, said, "Investors remained optimistic about the favorable rental trend and yield of offices, and the benefit of brand recognition is attractive to owners, especially mainland Chinese enterprises. The rare concentration of major en-bloc office deals in one quarter shows that investors are readily seizing office properties available on the market."
Of the 40 major deals recorded in Q1, each with a unit value of more than HK$100 million, interest also fell on the luxury residential sector as there were more quality projects available on the market this quarter which attracted buyers’ attention.
On the contrary, transactions of retail properties were scant. Mr Yip said, "Given the poor prospect of retail sales and rental trend, the transactions of shop fronts had a bigger discount in price. However, investors are more interested in retail properties that focus on local customers and basic goods and they will continue to look for opportunity to purchase in the near future."
The successful merger of Cushman & Wakefield and DTZ closed September 1, 2015. The firm now operates under the iconic Cushman & Wakefield brand and has a new visual identity and logo that position the firm for the future and reflect its trusted global legacy and wider history. The new Cushman & Wakefield is led by Chairman & Chief Executive Officer Brett White and Global President Tod Lickerman. The company is majority owned by an investor group led by TPG, PAG, and OTPP.
About DTZ/Cushman & Wakefield
Cushman & Wakefield is a leading global real estate services firm that helps clients transform the way people work, shop and live. The firm’s 43,000 employees in more than 60 countries provide deep local and global insights that create significant value for occupiers and investors around the world. In Greater China, the firm has a co-branded presence under the name of DTZ/Cushman & Wakefield and operates 20 offices in the region. Cushman & Wakefield is among the largest commercial real estate services firms with revenues of US$5 billion across core services of agency leasing, asset services, capital markets, facility services, global occupier services, investment & asset management, project management, tenant representation and valuation & advisory. To learn more, please visit www.dtzcushwake.com or follow us on WeChat (DTZ_China) and LinkedIn (https://www.linkedin.com/company/dtz-cushman-wakefield).