Land Resources
Introduction
The highest stock market in the history property market of Hong Kong has reached an end in this year’s second half on account of the social system and current economic doubts. Following the suggestions recently published by year-end property market review of JLL, rents of offices, prices, shops in high streets, and other residential properties are anticipated to reduce from 10% to 20% in this year 2020 (Lee, 2019). Nevertheless, the prime industrial properties’ capital values will only reduce from 5% to 10% from industrial success advancement and compact vacancy. The economic retardation in Hong Kong will depress the demand for houses, especially in the desirable residential market, which depends on the requirements of the PRC. Luxury residential capital values will reduce by approximately 20% in 2020.
Discussion
Residential market
Mass and desired residential capital values in the second half of 2019 slipped on the back of the impaired market sentiment. A large quantity residential displayed more elasticity on prices, aided by robust suppressed demand and mortgage measures relaxation. The desired residential market was highly supported by PRC capital for the last 5-10 years. However, this year, buyers of PRC became inactive because of the firmed policy in capital outflow and the trade war between the US and China (Wadu & Chan, 2019). Luxury residential capital values reduced by 4.7% as of July, restoring the growth attained in this year’s first half. The rate of unemployment begun to increase and achieved a 3.1% period from August to October in 2019. Provided a salient restoration interaction between housing prices and joblessness from concerning trends of history, the increasing rates of unemployment will evaluate on the housing market.
Office market
Grade A office market of Hong Kong has recorded a decreasing cycle resulting from the trade war between China-US and the local uncertainties in politics. Net pick-up of Grade A office has reduced by 62%, estimated to be up to 1.1 million square feet in 2019 (Lee, 2019). Demand was overpowered because many tenants disowned the plans of expansion. In contrast, the need from firms of PRC, which is in central and associate operators have either reduced by 34% and 26% in a relative manner this year, from a 2018 intense demand.
According to Alex Barnes (Hong Kong heads of markets at JLL) argued that alternative decentralization of high economical would remain an important trend in the coming year as tenants manage costs of real estate during unsure times. Falsehood demand is anticipated to stay reasonable in 2020.
Fig 1: A table showing the Prime Retail indicator in Hong Kong. (Source: Lee, 2019)
Conclusion
Falsehood imposition will be finite in 2020 since the economies at local and global levels will remain unsure. They anticipate the high rents of street shops to overpower 15% to 20% in the coming year. However, since the market newcomers still recommend going into prime shopping centers, rents will reduce by 50% in top shopping centers. The high temporary stores and near term falsehood occurring as landlords are anxious to occupy the place before the season of holidays.
References
Lee, J. (2019). Housing, homeownership, and social change in Hong Kong. Routledge.
Wadu Mesthrige, J., & Chan, H. T. (2019). Environmental certification schemes and property values: Evidence from the Hong Kong prime commercial office market. International journal of strategic property management.