Market Update Summary - August 2017

Market Update Summary - August 2017


Leasing activity slowed amid the summer school holidays with a net withdrawal of 17,300 sq ft recorded in the overall market. Wanchai/Causeway Bay and Kowloon East benefitted from ongoing tenant decentralisation as MNCs continued to seek out cost effective options. Maybank/Kim Eng reportedly pre-leased 32,200 sq ft at Lee Garden Three, consolidating their offices out of Wanchai and Admiralty, while Otis Elevator Company leased 52,000 sq ft at Goldin Financial Global Centre to expand out of Quarry Bay.

The number of new lettings in Central dropped by 75% m-o-m. PRC banking and financial services firms accounted for about 91 % of all new lettings in Central, in terms of floor area leased, and were active in the submarket's fringes. Fortune Fountain Capital, for example, leased 8,900 sq ft at Infinitus Plaza in Sheung Wan, relocating from offices in Central.

Rents in Central edged up by 0.1 % m-o-m, led by a 0.3% m-o-m expansion in Grade A3 offices rents. Meanwhile, rents in Wanchai/Causeway Bay advanced by 0.7% m-o-m as vacancy in the submarket dropped for the third consecutive month.

Strong investment sentiment in the strata-title sales market spread to offices in Kowloon. A small unit at Silvercord Tower in Tsimshatsui was sold for H KD 25.3 million (HKD 17,519 per sq ft), a record high in the building in terms of unit price.


Visitor arrivals retreated by 1.9% y-o-y in June, dragged lower by a drop in mainland Chinese visitors as t he Dragon Boat Festival holiday in China landed in May this year instead of June. Nevertheless, visitors from North Asia rose 10.2% y-o-y over the same period.

Retail sales edged up by 0.1% y-o-y in June against an 8.1% y-o-y decline in the sales of electrical goods and photographic equipment.

China Mobile leased a four-storey shop at lL-lM Sai Yeung Choi Street (about 7,200 sq ft) in Mongkok for a reported HKD 1 million per month, paying 44% less than the previous tenant Chow Tai Fook.

A handful of ginza-style commercial buildings in Causeway Bay reportedly changed hands in July, including the sale of L'Hart (about 32,700 sq ft) for HKD 965 million at an initial yield of about 1.6% and Cubus (about 68,000 sq ft) for HKD 2 billion.

According to market sources , CLSA has sold Zing! (about 79,000 sq ft) for HKD 2.1 billion, realising a gain of about HKD 500 million since acquiring the building three years ago. The sales proceeds will be in form of a cash lump sum of HKD 1.1 billion and an ownership transfer of L. Plaza in Sheung Wan (valued at HKD 1 billion) from the buyer.

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