Investment market continues to hit new highs in January
A total of four en-bloc office buildings were sold in January for a total consideration of HKD 14.8 billion, 17% higher than a year ago. The en-bloc sale of 18 King Wah Road—a new Grade A office development—drew the most attention.
HONG KONG, February 25, 2018 – The property investment market continued to hit new highs in January riding on strong investor interest, according to JLL's latest Property Market Monitor. A total of four en-bloc office buildings were sold for a total consideration of HKD 14.8 billion in January, 17% higher than a year ago.
The en-bloc sale of 18 King Wah Road—a new Grade A office development—drew the most attention, setting a new record for the largest office transaction in Hong Kong East.
In the leasing market, decentralisation remained as a key theme playing out among office tenants. Leasing activity was focused on Hong Kong East and Kowloon East, where tenant decentralisation and consolidation requirements underpinned demand. Net take-up in the overall market amounted to 209,900 sq ft in January. In Central, net absorption reached 33,000 sq ft as several tenants sought room for expansion.
Alex Barnes, Head of Markets at JLL, said: "The widening gap between rents in Central and emerging core business districts will add momentum to decentralisation. With the support of the outbound growth of mainland Chinese companies, we expect Hong Kong's Grade A office market rentals to continue to trend higher, rising by up to 5% in 2018. Central will continue to outperform the overall market as demand competes for the pockets of space that exist."
Office rents in Central advanced by 0.7% m-o-m in January on the back of a tightened vacancy environment. Rents in Hong Kong East grew by 0.8% m-o-m, driven largely by increasing demand at the top-end of the market.
Denis Ma, Head of Research at JLL, said: "The strong pricing achieved in the government sale of the Murray Road Car Park in May last year is now starting to permeate through the broader office market as investors reset benchmarks. Moreover, the record high prices being set in the market are no longer relying solely on PRC buyers with local money now also flowing into the market. Coupled with a tight occupier market, we expect capital values to rise a further 5-10% in 2018 even with interest rates set to rise further."
JLL (NYSE: JLL) is a leading professional services firm that specializes in real estate and investment management. Our vision is to reimagine the world of real estate, creating rewarding opportunities and amazing spaces where people can achieve their ambitions. In doing so, we will build a better tomorrow for our clients, our people and our communities. JLL is a Fortune 500 company with annual revenue of $16.3 billion, operations in over 80 countries and a global workforce of over 90,000 as of December 31, 2018. JLL is the brand name, and a registered trademark, of Jones Lang LaSalle Incorporated. For further information, visit jll.com