Capital values in Hong Kong commercial property markets stronger in 1H14

Even with shrinking transaction volumes.

Capital values in the commercial property markets continued to trend higher in 1H14 despite the shrinking transaction volumes.

According to a release from JLL, in the office sector, investment volumes reached HKD 7.3 billion,underpinned by end-user purchases, including Citi’s acquisition of the East Tower of One Bay East office development in Kwun Tong for HKD 5.4 billion.

In the retail sector, meanwhile, JLL noted that improving local consumption and sustained growth in Mainland Chinese visitor arrivals continued to fuel the interest of long-term investorswhile large-sized premises in non-core locations with value-add potential also received strong interest.

Joseph Tsang, Managing Director of JLL Hong Kong, said: “An increasing number of non-core assets will likely come onto the market as investors seek to cash in on record high prices. Larger transactions will be dominated by end-users or long-term investors.

Here's more from JLL:

Capital values of commercial properties are likely to remain largely stable though some street shops facing rental adjustments may come under increasing pressure, while residential market will continue to be affected by the government’s restrictive measures.

Against this backdrop, we expect capital values of Grade A offices and High-Street shops to stay flat, while values of warehouses will grow by up to 5-10% in 2014.

With no signs of the restrictive measures being lifted anytime soon, we expect capital values of luxury and mass residential properties to decline by around 5-10% and 0-5%, respectively, for the whole year of 2014.” added Tsang.