Commercial property investments overtake luxury sector as 1st choice

Following introduction of government measures late last year to stop speculative purchases of residential property by non-Hong Kong residents, property investors have turned to office and shop premise investments as these segments are well supported by strong end-user demand and offer stable investment prospects, global property consulting firm DTZ said.

According to DTZ figures, the transaction volume and transaction values of office premises both grew 42 percent in the fourth quarter from the third quarter last year, especially for en-bloc office properties. At the same time, sales of strata-title offices have also been active in some Kowloon East areas.

"As can be seen from the trends in the property investment market in Q4, the commercial sectors have overtaken the luxury residential sector in terms of transactions, and this is likely to continue in early 2013," Alvin Yip, DTZ's managing director, Investment, China said.

He predicted, "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 similar to that in the third quarter, but the total consideration grew to HK$10.6 billion in the fourth quarter of 2012 compared to the HK$8 billion in the third quarter of 2012.

"Mainland companies which intend to expand their businesses in Hong Kong and overseas have been enthusiastic to look for office spaces in the city. For retail premises, the good prospects for retail properties in Hong Kong are supported by the increasing tourist numbers and the spending power of both tourists and local residents," Yip added.

"Due to the low interest rate environment, and as commercial properties are not subject to Buyer's Stamp Duty (BSD) and Special Stamp Duty (SSD) which have been imposed on residential flats, shop premises transactions under the HK$10 million value range had jumped in the last few months," Centaline Commercial Director Raiky Wong told China Daily.

According to the Land Registry, residential flat transaction number and transaction values in last December plummeted 23.6 percent and 33.1 percent, respectively, year-on-year.

The Hong Kong government in late October unveiled an unprecedented 15 percent BSD on all non-Hong Kong resident and all corporate homebuyers, plus a 10 percent to 20 percent SSD on short-term home sales within a three-year period, to curb excessive bullish sentiment in residential flat investments.

According to the data of local property agent Ricacorp Properties, the transaction volumes of local industrial buildings in last December rose for a consecutive three-month period to 1,100 cases and registered an 11 percent jump in transaction values on a monthly basis.

oswald@chinadailyhk.com

(HK Edition 01/09/2013 page2)