May 29, 2017
Residential supply to reach a record high of 96,000 units in the next 3-4 years
Knight Frank launches the latest Hong Kong Monthly Report. In April, the Kowloon Grade-A office market stood out. In the residential market, although home supply will reach a record 96,000 units in the next 3-4 years, home prices are still set to rise further this year amid strong demand. Meanwhile, the retail market is set to achieve a new normal in the short term and further develop with huge potential in the long run as the city evolves.
On Hong Kong Island, Office demand in Central’s premium buildings remained strong. As tight availability persists, it is expected that Central’s Grade-A office rents to continue to rise in 2017, which will further accelerate the relocation of multinational and professional services firms. The Kowloon leasing market was very active in April, with more than 100 deals recorded in the month. Most transactions involved relocation to Kowloon East, reconfirming that cost-saving motives remained a key demand driver.
Residential sales rose another 20% month on month in April 2017, reaching 7,060, the highest level since October 2016. According to the Transportation and Housing Bureau, primary housing supply is expected to reach 96,000 flats in the coming 3-4 years, the highest since this data became available in 2004. While on the one hand, abundant supply and interest-rate rises will help suppress price growth; on the other hand, high land prices and strong housing demand will lend support to home prices, which are expected to rise another 5-10% in 2017.
Hong Kong’s retail sales rebounded 3.1% year on year in March 2017. It is expected that Hong Kong’s retail market will achieve a new normal in the short term and that it has huge potential to develop, along with Hong Kong’s future evolution.