- The number of deals signed in Hong Kong is likely to fall below 200 this month for the first time since records began in July 1995, according to Centaline Property Agency
- Central’s office vacancy rate reached 4 per cent in January for the first time in more than five years, according to JLL
Hong Kong's commercial property market, already reeling from last year's protests, is about to slide further into the doldrums as the coronavirus epidemic saps demand, according to analysts.
The volume of transactions for office, retail and industrial properties is poised for a historic low in February, having already sunk to record levels in the previous two months. Meanwhile, a grade-A office building near Central has seen its rent plummet by two thirds to HK$42 (US$5.4) per square foot, the lowest in 10 years.
The number of deals signed in the commercial real estate sector is likely to fall below 200 this month for the first time since records began in July 1995, said Wong Leung-sing, senior associate director of research at Centaline Property Agency.
"The number has been below 300 for a period of five straight months, averaging about 250, and that's the first time that has happened," said Wong. "The figure in January (202) has not reflected the impact of the coronavirus outbreak. Transactions are likely to remain low."
In particular, the number of office transactions in the three months to March may add up to fewer than 150, marking an all-time low, according to Midland IC&I.
"The emergence of the latest coronavirus outbreak has undoubtedly taken a toll on the office market," said Eric Ong, chief operating officer and director of commercial department at Midland IC&I. "Like during the Sars outbreak, this epidemic will freeze the turnover of offices in the short term."
Hong Kong poised for another real estate crisis
Central's premium office rents dropped the most among Hong Kong's core business districts as its vacancy rate reached 4 per cent in January for the first time in more than five years, according to JLL.
Bank of America Tower in Admiralty recently leased a unit measuring 2,367 square feet for HK$110,700 (US$14,212) a month, or HK$42 per sq ft, the lowest in a decade, agents said.
The rent per square foot is 67.2 per cent lower than another unit of 3,100 square feet in the same tower that leased for a record high of HK$128 per sq ft in mid-2018.
The amount of grade-A office space being leased fell by 173,600 square feet last month as freshly vacated premises remained on the market, according to Alex Barnes, head of markets at JLL.
"Immediate demand has weakened off the back of the coronavirus, as a number of businesses put decision-making on hold," he said.
Only a third of Chinese small businesses open as virus continues to disrupt
The outbreak threatens the outlook for this year, "forestalling any possibility of a near-term economic recovery", said Reed Hatcher, head of research at Cushman& Wakefield.
"The Covid-19 outbreak deals a second blow to Hong Kong's property market, already weakened from the social unrest in 2019, with most sectors to remain under pressure over the near term," added Hatcher. "The office market has come under increased pressure from depressed occupier demand in the face of uncertainty."
Average Hong Kong and Central office rents will fall by 8 per cent and 13 per cent respectively this year, according to Colliers International.
"Inspection activity (people viewing properties) should decline and hence leasing momentum will probably remain slow," said Rosanna Tang, head of research at Colliers. "A challenging business situation will hinder expansion."
She added the city is likely to see "postponement of IPOs or companies' plans to open offices in Hong Kong".
Copyright (c) 2020. South China Morning Post Publishers Ltd. All rights reserved.查看原始文章