We predict that the Hong Kong property markets are set to experience a subdued 2019 in the shadow of continuing interest rate hikes, a shaky stock market and weaker sentiment.
We saw both office and retail prices moving largely in line with expectations in 2018, with the leasing market surprising on the upside.
The Grade A office market saw price declines across the board with the US / China trade conflict and interest rate hikes dampening investment sentiment.
The fact that many end users on Kowloon side are engaged in trade-related businesses meant they were ultra-cautious in making purchasing decisions towards the end of 2018.
The recovery of the retail market was focused on low-to-mid end items, which meant interest in sub-urban retail with another batch of Link REIT malls sold for HK$12 billion. Nevertheless, with luxury retailers remaining cautious, prime street shops saw very few transactions.
Rising interest rates, a slowing China economy as well as a protracted Sino-US trade war may all adversely affect the overall commercial market prospects in 2019, while the completion of some high-profile infrastructure may benefit commercial investment in nearby locations.
For the coming year we expect office sector rents to gain 2.5 to 5%, with flat pricing in Central but down as much as 5% overall; shopping centres and prime street shops should both hold steady at 2% gains on the rental front, but street shop prices will get hit again, losing 5%.