HK - Commercial Properties & REITs

[winston]

Hong Kong office rents decline with increase in vacancies

The office vacancy rate in Hong Kong rose in the fourth quarter.

Hong Kong's office market has been hit with higher vacancies and falling rents, even as demand across Asia-Pacific picks up in line with an improving outlook, a report shows.

The vacancy rate in the city rose 0.77 percentage point to 3.8 per cent in the final quarter of last year from a year earlier, although it dipped 0.18 percentage point on a quarter-on-quarter basis, CBRE's report on the region's office market found.

http://www.scmp.com/property/hong-kong- ... -vacancies

[winston]

Hong Kong Office Rents Drop in all Submarkets

By Francys Vallecillo

Office market rents dropped across all submarkets in Hong Kong for the first time since the second quarter of 2009, according to Savills Research.

Expansion demand remained subdued in the fourth quarter, with vacancies across all submarkets except Central increasing at a rate of 0.1 to 1.8 percentage points.

http://www.worldpropertychannel.com/asi ... e-8009.php

[winston]

Retail rents seen slumping 8pc in upscale areas by Frances Sit

Retail rents at top-tier districts may fall up to 8 percent this year amid a slowdown in sales and high rents, compelling brands to migrate to northern districts in search of better opportunities.

Cushman & Wakefield executive director and head of retail Michelle Woo said more cautious sentiment and high rents in top districts such as Central, Causeway Bay and Tsim Sha Tsui, are forcing shops to leave, leading to higher vacancies on both prime and secondary streets.

The retail sector continues to face headwinds associated with slower tourism growth, a changing visitor profile and lower spending in the first half. Retailers remain conservative, with watch and jewelry businesses notably cutting back on expansion.

Vacant street shops in Central and Tsim Sha Tsui jumped 1.5 fold in the first half from the previous six months. Vacant shops in Central rose from 47 in December last year, to 79 in June 2014, while those in Tsim Sha Tsui reached 95 from 44 last year.

Due to higher vacancy and slower demand, retail rent in second- and third-tier streets like Cameron Road in Tsim Sha Tsui and Lee Garden Road in Causeway Bay could slump 5-8 percent in the second half. Rents at prime locations like Peking Road in Tsim Sha Tsui could fall up to 3 percent.

International brands are migrating to Northern district like Tuen Mun, Tsuen Wan and Yuen Long in search of customers and cheaper rents.

Meanwhile, A-office rentals fell 1.8 percent in the first half and might dip another 1-2 percent till the end of the year, the firm said.

Also, Kowloon West could see the highest vacancy rate - 16.4 percent - due to increased office supply from new projects such as K Wah International's (0173) Octagon.

Source: The Standard HK

[winston]

Retail vacancies in Hong Kong soaring, but rents dip only slightly

Vacancy rates for retail outlets, at their highest in three years in four shopping districts, will head higher still by early next year, but not enough to bring down rents by more than a modest amount, analysts say.

Research by consultancy Cushman & Wakefield shows 128 shops in Causeway Bay vacant this month, up 56 per cent from 81 in December.

"The vacancy rate in Causeway Bay is the highest since the outbreak of severe acute respiratory syndrome in 2003," said Michele Woo, the firm's executive director for retail.

Vacant shops in Tsim Sha Tsui, another popular shopping district, have nearly doubled from 44 to 93 during the same period. Vacancies in Mong Kok have surged 129 per cent to 48, and those in Central have jumped 62 per cent to 76.

The vacancies in shopping districts are mainly in second and third-tier shopping streets, as the vacancy rate in first-tier streets remains low.

"But it is only a beginning," Wu said. "Unless there is a new policy to stimulate retail sales, the situation will become even worse after Lunar New Year in 2015."

While the retail market was booming and rents in first-tier shopping streets stayed high, Wu said, retailers would rent shops in second-tier streets at a higher rent in order to have a presence in the key shopping streets.

But now, they would rather open shops in new shopping districts if the returns in second-tier streets cannot justify the expensive rents.

"Although the landlords in second-tier streets have begun to cut their asking rents, it's too late. Many retailers are losing interest," Wu said.

The increasing vacancy rate is a result of falling retail sales. Census and Statistics Department data shows retail sales dropped 4.1 per cent year on year in May, the third consecutive month in which they fell.

Luxury watch and jewellery retailers used to be the most aggressive in expanding in shopping districts and were willing to pay a premium to rent a shop in prime shopping streets.

However, following a change in the shopping habits of mainland visitors, sales of watches and jewellery plunged 24.5 per cent year on year in May.

"It hit the business of local luxury watch and jewellery retailers the most," said Jeannette Chan, regional director for retail at consultancy JLL. "They are not as aggressive in expansion as before. It left only affordable international luxury brands to remain active in seeking new shops."

Higher vacancy rates and slumping retail sales have resulted in a drop in overall retail rents in shopping streets, but the decline has been mild.

Data from Cushman & Wakefield shows the average monthly rent in Causeway Bay's main shopping streets dropped 1.6 per cent quarter on quarter to HK$1,800 per square foot in the second quarter. Rents in Tsim Sha Tsui fell just 0.7 per cent.

"Shop owners in second-tier shopping streets began to cut their asking rents in recent months," said Joe Lin, a senior director of retail services at CBRE. "But tenants have turned cautious in leasing already. The shops are still unable to find tenants. So we didn't see a significant fall in rents."

However, CBRE has revised its forecast for rents. "We expect the rent in second-tier streets will drop 15 per cent this year, compared with our old forecast of 10 per cent," Lin said.

Since many international brands are still looking for shops in first-tier locations, rents in those streets would be flat.

Source: SCMP

http://www.scmp.com/property/hong-kong- ... y-slightly

[winston]

<Research Report>M Stanley latest forecast on HK property prices

Morgan Stanley issued a research report that updates the forecast for Hong Kong residential property prices, office rents, retail mall rents:

Item / New 2014 Forecast / Previous 2014 Forecast
Residential Property Prices / +5% / -10%
Office Rents / +5% / +5%
Mall Rents / 0% / 5%

Item / New 2015 Forecast
Residential Property Prices / +5%
Office Rents / +5%
Mall Rents / -5%

Source: AAStocks Financial News

[winston]

Hong Kong to see 10pc rise in office rents over next five years

by Peggy Sito

http://www.scmp.com/property/hong-kong- ... five-years

[winston]

Hong Kong Shop Rents Seen Falling 5% as Shopping Slows

http://www.businessweek.com/news/2014-1 ... ping-slows

[winston]

Phoenix lists rents for TOWER 535

The Grade-A office-cum-retail project in Causeway Bay of Phoenix Property Investors will charge monthly rents of HK$60 per square foot while stores on the podium levels will command HK$1,000 per sq ft.

Formerly known as Central Mansion and President Shopping Centre, the project has now been named TOWER 535 and is located at 535 Jaffe Road, Causeway Bay.

The 25-story building, with 11,000 sq ft per floor, has a total gross floor area of 270,473 sq ft. It consists of 16 floors of offices with the rest shops.

TOWER 535 cost HK$4 billion. "If all of the units are rented out, monthly rental revenue will be about HK$30 million," said Khim Goh, who is regional director of asset management at Phoenix.

The project is due to be completed in the third quarter next year. It opened for lease yesterday.

Source: The Standard HK

[winston]

Parking spot fetches $4m

A Shun Tak Centre parking slot sold by the central government liaison office has fetched a record HK$4 million.

The liaison office off-loaded a whole story in the same Sheung Wan commercial building last month for HK$141 million.

It gained HK$125 million from the sales, as the assets were acquired for a total of HK$20 million in 1986.


Source: The Standard HK

[behappyalways]

Hong Kong retail rents drop as Chinese shoppers stop
http://www.cnbc.com/id/102544220