Gloria Siu (Class of 2016)
COVID Impact on Hong Kong Real Estate
The retail business in Hong Kong has taken a tremendous hit since February, due to COVID-19. With the closure of borders, tourist numbers have hit rock bottom, a market which was responsible for over 70% of Hong Kong’s total retail in past years. As the retail leasing market is closely correlated with retail sales, it has dropped both in terms of occupancy rate and rental in general. The number of sales transactions of retail property has dropped too, whilst some investors are taking the advantage of buying in low for street retail portfolio.
Office leasing has been relatively stable, but there is a growing trend of companies reducing leased office spaces once contracts expire and some bigger, international companies are consolidating several branch offices into fewer big ones in prime locations. Hence, the office leasing market is forecasted to drop in the coming 6-12 months and more vacancies will occur in non-prime office locations. Just as in retail property transactions, some commercial investors are buying in low for office space.
Residential leasing has also dropped due to less demand from expats and overseas students. As for locals, because most residential rentals have decreased, they are either trying to lease cheaper flats or move to more convenient locations, and most renewed leases have got rental concessions from current Landlords. However, the residential transaction market is still quite active since the government has loosened the mortgage percentage and the interest rate is lower. Plus, more owners are willing to consider sales of property due to the uncertainty of the economy in the coming year.
Company: K11 Concepts Limited
Job Title: Assistant General Manager, Leasing