Office spaces' new investor darling

After parking lots come office and business spaces.

Hong Kong investors are turning their attention to commercial property investments as stable investment destinations following government measures that have slowed returns in the residential property market.

Commercial properties are not subject to the Buyer's Stamp Duty and Special Stamp Duty imposed on residential flats by the government. Because of this, shop premises transactions under the HK$10 million in value have jumped in the last few months.

The Land Registry said the number and value of residential flat transactions last December plummeted 23.65% and 33.1%, respectively, because of the imposition of both stamp duties.

Property consulting firm DTZ said investments in office and shop locations are backed by strong end-user demand. DTZ said transaction volume and transaction values of office premises both grew 42% in the fourth quarter from the third quarter last year. Sales of strata-title offices have also been popular in some Kowloon East areas.

The commercial sectors overtook the luxury residential sector in Q4 in terms of transactions, and this is likely to continue in early 2013, DTZ noted. The company added that purchases of office and retail space will continue to lead transactions, driven by end user demand for offices and the stable prospect of retail properties.

Statistics show that the number of major retail transactions in the fourth quarter was unchanged from that in the third quarter. Total transaction value, however, grew to HK$10.6 billion in the fourth quarter of 2012 compared to the HK$8 billion in the third quarter of 2012.

This makes retail premises good prospects for retail properties because the increasing tourist numbers and the spending power of both tourists and local residents.