HK - Commercial Properties & REITs

[behappyalways]

租用12年　不敵奢侈品冷鋒
英皇鐘錶擬棄租羅素街舖王
http://hk.apple.nextmedia.com/financees ... 0/19094932

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

[winston]

Shop rents to see steep drop in `healthy' correction

DTZ has forecast shop rents in prime districts, like Causeway Bay, will fall by as much as 15 percent amid declining mainland visitors.

Rents near mainland border districts, such as Sheung Shui, Yuen Long and Tuen Mun, may also retreat by more than 10 percent, said Kevin Lam Ying-wai, head of DTZ's Business Space Hong Kong.

The real estate services firm reversed its forecast from a rise in rents of 5-10 percent after the number of visits to Hong Kong by Shenzhen residents was reduced to one trip per week from Monday.

DTZ managing director Alva To Yu-hung said rents along top- tier streets would return to 2012 levels, which is a healthy adjustment. Second-tier streets or districts with less tourists are unlikely to be affected, he added.

Knight Frank expects rentals in border districts to slump by up to 20 percent.

Daniel Wong Hon-shing, chief executive of Midland Realty's commercial property division, said there have been no vacancies for retail stores along first-tier streets in Sheung Shui for the past two years as they were occupied by jewelry outlets and pharmacies.

He said these outlying district rental levels were similar to those in second-tier streets in Mong Kok, which could fall by 30 percent this year.

DTZ added that net absorption of Grade A offices in all districts has turned positive.


Source: The Standard

[winston]

Up to 3,000 people may lose their jobs if an estimated 30 percent of retailers in the northern New Territories, Mong Kok and Tsim Sha Tsui, are forced to lay off staff or close shop with the one-trip-a-week policy for Shenzhen residents, lawmakers say.

Source: THE STANDARD

[winston]

not vested

JP Morgan is positive on the landlords and the top picks are Hongkong Land and GREAT EAGLE H (00041.HK) because the office supply is tight.

JP Morgan raised the target prices for developers.

The target price of SHK PPT was lifted from $134 to $155; KERRY PPT was raised from $33 to $45; SINO LAND was advanced from $13.3 to $16.8.

The broker also elevated the target price of GREAT EAGLE H from $28.8 to $43.5.

However, since the Chinese government may reduce the import tariffs for consumer goods, the Hong Kong retailers may be affected.

The broker remained cautious on WHARF HOLDINGS (00004.HK) and LINK REIT (00823.HK).

Source: AAstocks.com

[winston]

Hong Kong retailers set for plunge in rental costs

by Ben Bland

http://www.ft.com/intl/cms/s/0/7684427c ... z3bKGUSSBg

[winston]

Cost of parking spaces revs up with opening of projects

The cost of parking spaces in certain districts of Hong Kong has surged as too many drivers from new residential projects chase too few spots.

A parking space at Indi Home a Tsuen Wan estate touted as a "blessing for the poor" now asks for a monthly rent of HK$3,500 amid overwhelming demand.

At nearby Chelsea Court a parking space will set back a tenant HK$4,300 a month.

That compares to a monthly rate of HK$2,800 for a similar property at The Waterfront, and HK$3,500 at Sorrento.

Both are upper class developments atop the MTR's Kowloon station.

Those living in the district have lined up overnight every in the hope of renting a space at a public multistory car park.

"There is in Tsuen Wan a severe imbalance between supply of parking lots and demand for them, which arises from a slew of new residential projects emerging in the area," Midland Realty residential chief Sammy Po Siu-ming said.

While City Point, a development by CK Hutchison (0001), has around 1,700 flats, it provides no parking facilities. This has pushed up the price of spaces in the neighborhood to nearly HK$1 million, compared to HK$300,000 just a few years ago, according to Po.

Similar demand for parking spaces is also seen in Sha Tin and Tai Wai.

In the residential market, a modestly priced new project in Yuen Long is set to sell like hotcakes, with 59 out of the first 60 flats posted for sale costing less than HK$3 million.

At Domus, a development by Paliburg (0617) and Regal International (0078) in Hung Shui Kiu, the cheapest unit will sell for a mere HK$2.39 million after maximum discounts.

The flat measures a mere 243 salable square feet, meaning the price tag is around HK$9,850 per salable square foot.

Meanwhile, CK Hutchison said it has received 10,800 expressions of interest in the first round of sale at The Beaumount II.

That means the 401 flats on sale today are 27 times oversubscribed.

Source: The Standard HK

[winston]

Retail rents seen falling

The rental prospects of retail shops continue to drop due to the dual impact of slow growth in visitor arrivals and decrease in luxury goods sales volume, DTZ said.

The real estate adviser found that rentals in major retail high streets, such as Russell Street, Queen's Road Central and Canton Road, in January to April 2015 slumped 10-43 percent compared with the same period in 2014.

It also expects the decline in rents to spread to other districts like Sai Yeung Choi Street South in Mong Kok, but to a lesser extent.

Kevin Lam Ying-wai, DTZ's head of Business Space Hong Kong, said the overall rental in core areas during the first half fell 20-30 percent, predicting it will further decrease by 5-10 percent within six to nine months, back to the 2011 level.

Still, he believes the rents will stabilize in the coming 12 months.

Lam suggested that the rental level is in line with the sales volume. While the retail sales of jewelry and watches sectors fell 17.2 percent year on year, that of the basic goods sectors increased.

"The rental prospects for second-tier locations with larger concentrations of shops selling basic goods will be more stable, and landlords will even be able to raise rents to some extent during renewals," Lam said.

Meanwhile, the local office market continues to grow due to the expansion of mainland companies in Hong Kong. Net absorption of office space in Central and Admiralty soared the most during the second quarter about 364,857 square feet.

Vacancy of office space in Central and Admiralty remains low, down 1.4 percent to 3.6 percent year-on-year. DTZ's managing director for Hong Kong Alva To Yu-hung foresees a jump of 10-15 percent in the coming two quarters in this district.

Source: The Standard HK

[winston]

End users drive Hong Kong office demand in hedge against higher rents

Limited office stock in city centre prompts buyers to look at decentralised districts

Owner-occupiers are expected to remain a key demand driver for office properties in Hong Kong as they look for options to hedge against escalating rents, according to property consultants.

"Low vacancy triggers occupiers to consider buying, partly also as a hedge against escalating rents," international property consultant CBRE said in a newly released report.

CBRE forecasts that overall market rents will increase by high single-digits to 10 per cent this year. Central landlords will enjoy the strongest rental growth of 10 to 15 per cent, while some submarkets are expected to benefit from the spillover effect from the business district.

"Yet limited stock of saleable assets in the Central Business District is prompting buyers to consider assets in decentralised districts like Kowloon East," the report said.

Both primary and secondary markets in Kowloon East will serve as the major source of office supply in the city in the medium term, providing a wide range of property options to tenants and owner-occupiers, said another consultant, Colliers International.

Colliers, on behalf of its client, is selling the entire 12th floor of Enterprise Square III, Kowloon Bay, by public tender. The tender will close on August 21. The building is a landmark grade A office site in Kowloon Bay.

During the three months to May, the total value of transactions for properties priced above HK$30 million increased 6 per cent quarter on quarter to HK$4.9 billion, Colliers said in a soon-to-be released research report.

A notable transaction was the sale of a whole floor at 9 Queen's Road Central to a mainland Chinese investor for HK$480 million, or an average price of HK$34,861 per square foot - a new record high for grade A office property in Hong Kong, it said.

However, CBRE expects the number of larger transactions to remain thin in the second half of this year.

"We expect, in Hong Kong, the number of transactions will remain thin in the second half of 2015 due to the lack of saleable assets available in the market," said Yu Kam-hung, a senior managing director of investment properties at CBRE Hong Kong.

Commenting on the impact of a possible interest rate increase, Yu said: "Any interest rate rise by the [US] Federal Reserve in the near future will likely be moderate and progressive, and the immediate impact on property yields will be mild. Prices are not expected to deviate too significantly from rental trends."

Total sales turnover of commercial real estate amounted to HK$27.1 billion, an increase of 153 per cent quarter on quarter, according to CBRE.

However, the increase was mainly due to one hotel transaction - Abu Dhabi Investment Authority's HK$1.85 billion payment to New World Development for a 50 per cent stake in three hotels in Hong Kong.

Excluding the transaction, total investment volume declined to 6.1 per cent quarter on quarter to HK$10.9 billion, the lowest quarterly total recorded since the first quarter last year, according to CBRE.

Source: SCMP

[winston]

<Research Report>M Stanley: Landlords, REITs Can Still Outperform

Morgan Stanley, in its report, mentioned that the Hong Kong landlords and REITs can still outperform in a rising rate cycle, given that the rental growth and corporate activity can drive to higher NAV.

The broker prefers office and mass retail over luxury retail.

The broker mentioned that REITs will be more flexible in growing AUM in the future and the local REIT market could double in the medium term since a rule change last year allowed the REITs to expand portfolios through property development and financial investments.

In addition, Hong Kong REITs only account for 0.8% of total HSI market cap, less than that in other markets.

Morgan Stanley said LINK REIT (00823.HK) and HK Land are still the broker's top ticks in this sector.

The rating of LINK REIT was upgraded from Underweight to Overweight and its target price was lifted from $44 to $51.

The broker also initiated FORTUNE REIT (00778.HK) at Overweight with a target price of $9.

On the other hand, HYSAN DEV (00014.HK) is the broker's least preferred stock among the landlords because it has a higher proportion of luxury retail tenants, lacking in short-term catalysts.

Source: AAStocks Financial News

[winston]

Retail sector poised for growth by Imogene Wong

Hang Lung Properties (0101) chairman Ronnie Chan Chi-chung said the local retail market is healthy, but it could have performed better had local people been more hospitable, not hostile toward mainland visitors.

"The retail market [in Hong Kong] is not too bad, but it could and should be better. We have ourselves to blame," said Chan, who also chairs Hang Lung Group (0010).

Still, he expects Hang Lung's shopping malls in Hong Kong to record a higher rental growth next year, with the opening in Causeway Bay later this year of the flagship H&M store and other renovation schemes.

The group's net profit in the first half of this year fell 11.7 percent to HK$2.84 billion from a year earlier, mainly due to property sales which slumped 17 percent to HK$745 million. Underlying net profit dropped 1.4 percent to HK$2.45 billion.

More than 80 percent of turnover came from property leasing totalling HK$3.86 billion, up 9 percent from a year earlier. Seven malls and grade A offices in the mainland contributed HK$2.12 billion, up 10 percent from a year earlier.

Chan cited "real pressure" posed by negative rental reversion in its shopping malls outside Shanghai.

He said consumer sentiment in the mainland remains weak and growth prospects are not promising. But Hang Lung won't downgrade its malls to cater to the mid-end market, he said.

"We shouldn't go down and bump into a lot more competitors. It is time to stay high, or even higher" to attract top brands, he said.

Managing director Philip Chen Nan- lok said one of the group's top-end tenants is asking for more space. The group plans to invest HK$1.3 billion to upgrade its two malls in Shanghai, a move with a payback period of about four years.

A new mall, Olympia 66 in Dalian, will open this year.

Source: The Standard HK