HK - Commercial Properties & REITs

[winston]

<HK Home>Colliers Expects HK Annual Rents for Grade A Buildings to Fall 7%, High-street Shops Rent to Hike Max. 10%

The macro-economy is still affected by many uncertainties in 2Q24, while the sentiment in Hong Kong's commercial real estate industry was dull, with mixed results, Colliers released a report saying.

The rent of grade A buildings in Hong Kong fell by 1% QoQ to $51 per sq.ft., and is expected to decrease by 7% YoY for the whole year, according to Colliers' data.

Related News: Jefferies Cuts SWIREPROPERTIES (01972.HK) to $12, Lowers Earnings Forecast

The overall vacancy rate of grade A offices remained high at 16.6% in 2Q24, with the total vacant area reaching 13.8 million sq.ft. NFA, up 400,000 sq.ft. QoQ, setting a record high.

Colliers believed that the measure to increase the tax allowance for Chinese residents, which was implemented since August 2024, will boost retail sentiment, and rents for high-street shops are expected to rise slightly for the whole 2024, with a rate of less than 10%.

Source: AAStocks Financial News

http://www.aastocks.com/en/stocks/news/ ... -news/AAFN

[behappyalways]

Hong Kong landlords pay bigger agent fees to fill empty offices
https://www.theedgesingapore.com/news/p ... ty-offices

[behappyalways]

Hong Kong Luxury Mall Almost Empty As Chinese Spending Plunges
https://m.youtube.com/watch?v=7WRjDGRi1GQ

[winston]

Office rents in city could decline 10pc

Hong Kong's office rents may decline up to 10 percent in 2025 due to oversupply and high vacancy rates, according to HSBC Global Research.

A HSBC Global Research report says office rents may decline by 7 to 10 percent this year, following the 39 percent decline since its peak in 2019.

It has lowered the target price for rent collection shares by an average of 5.9 percent and the recent improvement in leasing demand is not enough to offset the new supply, which is expected to decline starting from the second half of 2026.

Midland IC&I expects the prices of Grade A offices to remain stable this year after a slump last year, with transactions of offices rising 20 percent year-on-year.

Midland said in 2024, sale prices of targeted Grade A offices dropped by over 23 percent year-on-year, noting the drop was mainly due to commercial buildings in traditional core districts significantly lowering asking prices to attract buyers.

The upcoming rate cuts and government's favorable policies on attracting investment and talent will boost office transactions to rise around 20 percent year-on-year, it added.

Meanwhile, Sun Hung Kai Properties (0016) expects foot traffic at its apm shopping mall in Kwun Tong to record a double-digit increase year-on-year alongside 10 percent growth in business during the Chinese New Year. Its promotional expenses for the Lunar New Year exceed HK$9 million, 10 percent higher than the previous year. The promotion period runs from January 17 to February 16.

Source: The Standard

https://www.thestandard.com.hk/section- ... cline-10pc

[winston]

Hong Kong may need 7 to 15 years to digest city’s glut of commercial space, experts say

The city has 15 million square feet of excess office space, more than all the current space in the main business district

Source: SCMP

https://www.scmp.com/business/article/3 ... 307d6&tc=3

[winston]

<Research>HSBC Research Expects Office Rents in HK to Drop by Another 7-10% This Yr

Jones Lang LaSalle (JLL)'s 1Q25 office statistics show that the quarterly decline in overall office rents in Hong Kong narrowed to 0.2% (down 1.9% in 4Q24), with Central office market rents falling by 0.7% QoQ, HSBC Global Research issued a research report saying.

The broker noted the recent increase in both tenant enquiries and leasing renewals, but the overall occupancy rate declined slightly.

HSBC Global Research remained cautious and expected office rents to drop by another 7-10% in 2025.

Under an optimistic scenario, the broker may see a moderation in rental decline and some signs of stabilization in the market during the year.

SWIREPROPERTIES (01972.HK) (rating at Buy and target price of $19.5) should be able to offset the impact of office rental pressures with its improving shopping mall business and short-term property sales, with its buyback program and growing dividend appealing to investors.

Hongkong Land may enjoy a re-rating as a result of its asset recycling initiatives. Any sale program to reduce its NAV discount could be a catalyst for the share price.

Source: AAStocks Financial News

http://www.aastocks.com/en/stocks/news/ ... -news/AAFN

[winston]

Hong Kong retail rents have further to fall amid consumer spending dip

Leasing activity is strong as operators seize on bargain rents to upgrade, but shopping trends worry landlords, suppress investment

by Salina Li

Activity in Hong Kong’s retail leasing market is strong despite lukewarm retail sales, as companies take advantage of rents that are relatively low – and set to fall further, according to some experts – to move into larger premises or better locations.

“The retail market has shown a mixed picture, where we see some business owners from [food and beverage] and clothing shops worrying about their sales during the Easter Holiday, yet leasing activity in the core retail districts remains very active,” said Jeannette Chan, senior director of retail at JLL Hong Kong.

Leasing momentum was particularly strong in mass-market segments, but “retail rents continued to dip as landlords in general offered discounts to attract and retain tenants amid sales headwinds”, Chan added.

Source: SCMP

https://www.scmp.com/business/article/3 ... pe=section

[winston]

Why can’t Hong Kong retail landlords cut rents for struggling tenants?

Slashing rents impacts assessments, so landlords must strike a balance between cash flow and long-term asset value, Knight Frank says

In a commercial rental market beset by high vacancy rates, many Hong Kong landlords feel stuck between a rock and a hard place: giving tenants a break on rent makes it harder to pay mortgages and threatens asset value, but holding the line on rent runs the risk of driving tenants away.

Retail sales in the city contracted for 14 straight months until May, when they expanded by 2.4 per cent to HK$31.3 billion (US$3.9 billion).

The slump has wreaked havoc on retailers and brands, many of which have been forced to reduce their presence or exit the city altogether.

Source: SCMP

https://www.scmp.com/business/article/3 ... pe=section

[winston]

New normal: why Hong Kong’s commercial property deep-freeze is here to stay

Landlords have ‘not yet faced reality’ as a ‘negative spiral’ makes recovery ‘improbable within the next decade’, analysts say

by Salina Li and Aileen Chuang

In the second instalment of our two-part series on Hong Kong’s beleaguered property market, analysts explore why this slump is different from past downturns.

The first instalment discussed how the resurgence of the city’s stock market as a venue for initial public offerings could boost office uptake and ease developers’ pain.

Swiss bank UBS got a steal in 2003 when it leased 146,000 sq ft across six floors in Two International Finance Centre – then the tallest building in Hong Kong – for less than HK$20 (US$2.55) per square foot.

The landlords, MTR Corp and a consortium led by Sun Hung Kai Properties, signed the 10-year agreement as the outbreak of severe acute respiratory syndrome (Sars) was ravaging an already weak market.

Fast-forward a decade, and UBS had to pay five times more to extend the lease, thanks to a booming office market amid a blazing-hot economy.

Source: SCMP

https://www.scmp.com/business/article/3 ... pe=section

[winston]

HSBC flags 73% of Hong Kong commercial property loans as risky

https://x.com/FT/status/1955048571838820429