Hong Kong’s property sector to sustain rising capital growth except in residential

Residential sector seen to consolidate by 10%.

According to Colliers International, the current trend of capital growth is going to be sustained except in the residential sector which is predicted to consolidate by 10% as a result of the Buyers’ Stamp Duty (BSD).

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Despite the general softening of rents, office yields were compressed further in 2012 due to inflation and capital flow from the local residential sector.

Office rents will buck the downward trend in 2013 thanks to steady growing occupational demand in the legal sector and the continued support from mainland companies.

Buying interests including both investors and end-users were immense for office developments in decentralised locations.

In anticipation of further rent stabilisation in traditional CBD markets, sales prices in core areas are predicted to catch up in 2013.

The cooling measures implemented by the government on the residential sector actually led to an immediate volume contraction in 4Q 2012. Upward price momentum stalled and housing rents fell 5% YoY as corporate tenants downgraded themselves to more affordable premises.

In the retail sector, rent growth is going to taper off in 2013 since retailers have become more realistic to make their offers more in line with the trend of retail sales. Capital values could see double-digit growth, again due to the strong investment demand.

In the industrial sector, prospective rent growth is expected to stay steady in 2013 but capital growth is predicted to slow to about 10% after the distinct yield compression in 2012. However, quality logistics warehouses are anticipated to see outperforming growth due to the limited supply in the marketplace.