Hong Kong commercial property market recovers confidence in early 2019, confirms RICS report

Commercial sales and rental values stabilise amid increased market confidence, report industry professionals

HONG KONG, CHINA – Media OutReach – 7 May 2019 – The stagnation experienced across Hong Kong’s commercial property market last year has eased, as confidence returns moving into 2019, according to an authoritative new report by the RICS (the Royal Institute of Chartered Surveyors).

Growth on the Chinese Mainland and a relaxation of trade war fears are chief among the factors helping the market towards stability, according to the recently published Hong Kong Commercial Property Monitor.

RICS’s quarterly report surveys experts in the city’s sales and letting markets, who reported a substantial shift in market sentiment from negative to neutral forecasts. The Investment Sentiment Indices (ISI) — a measure of supply, demand and expectation — reported a jump to +3% in the first three months of 2019, from -13% in the last quarter of 2018, while the Occupier Sentiment Indices (OSI) recorded a similar increase from -18% to -1%.

Together these figures represent a relieving moment of stability following a turbulent period of market scepticism. The stabilization comes as a number of external risks have been mediated, the report notes, identifying three key factors: Steps taken by the Chinese government to support Mainland growth, as well as a period of cooling in the US-China trade war, while global interest rate cycles have been put on hold.

The report’s author Sean Ellison, RICS Senior Economist for Asia-Pacific, said: “Survey respondents continue to signal a ‘soft landing’ for most commercial property markets. The market appears to be preparing for a period of below-trend, but generally positive, growth in capital values and rents, rather than a sharp contraction. However, the outlook is still clouded by uncertainties surrounding trade, and other macroeconomic risks.”

Yet looking ahead professionals reported no increase in commercial occupier demand — following a marked pullback in the final quarter of 2018 — despite an increase in both rental and landlord supply. Meanwhile experts forecast a modest rental growth of +1.6% across the commercial sector over the next 12 months, while capital values are expected to increase by 2.2% in the same period.

The RICS Hong Kong Commercial Property Monitor is a quarterly sentiment index tracking trends in the commercial property market. It is a leading indicator for global investment and occupier markets. The full report is available at www.rics.org/economics

About RICS

Confidence through Professional Standards

RICS promotes and enforces the highest professional qualifications and standards in the development and management of land, real estate, construction and infrastructure. Our name promises the consistent delivery of standards — bringing confidence to the markets we serve.

We accredit 125,000 professionals and any individual or firm registered with RICS is subject to our quality assurance. Their expertise covers property, asset valuation, real estate management; the development of infrastructure; and the management of natural resources, such as mining, farms and woodland. From environmental assessments and building controls to negotiating land rights in an emerging economy; if our members are involved the same professional standards and ethics apply.

We believe that standards underpin effective markets. With up to seventy per cent of the world’s wealth bound up in land and real estate, our sector is vital to economic development, helping to support stable, sustainable investment and growth around the globe.

With offices covering the major political and financial centres of the world, our market presence means we are ideally placed to influence policy and embed professional standards. We work at a cross-governmental level, delivering international standards that will support a safe and vibrant marketplace in land, real estate, construction and infrastructure, for the benefit of all.

We are proud of our reputation and work hard to protect it, so clients who work with an RICS professional can have confidence in the quality and ethics of the services they receive.