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Property News Weekly Digest
〈Asian Post, October 5, 2019〉Availability of space in the business district is at 14-year high in the third quarter, and analysts see the market weakness continuing into next year

The outlook for Hong Kong's commercial property market looks bleak after rents for grade A office space in Central softened significantly and availability climbed to a 14-year high in the third quarter.

Cushman & Wakefield said yesterday that tenants generally held off committing to relocations or expansions in the quarter ended September amid concerns about the city's slowing economy and as protests intensified over a controversial extradition bill that would have made it easier to send criminal suspects to the mainland for trial.

Office rents in greater Central - Central, Admiralty and Sheung Wan - fell by 3.2 per cent in the quarter, the biggest quarterly drop since 2012, the property consultant said. Office space was leasing for HK$133.70 per square foot on average in greater Central in the third quarter.

"The overall [office] leasing sentiment has worsened, and is likely to remain weak over the remainder of 2019 and into 2020. So far, we haven't seen any signs or factors which suggest that there could be a sudden improvement in office leasing sentiment," said John Siu, managing director of Cushman & Wakefield in Hong Kong.

〈The Standard, October 5, 2019〉Property transactions in Hong Kong fell by 20.7 percent month on month to 4,090 in September, the lowest so far this year, data from the Land Registry showed.

In the office leasing market, the availability rate in Central rose to 7.4 percent, the highest in around 14 years.

The turnover for all property units amounted to HK$36.4 billion. That was down by 14.2 percent from August and by 20 percent year on year.

For residential units, the number of deals declined by 15.6 percent month on month to 3,447, with the amount decreasing by 24.4 percent to HK$27.66 billion.

Sammy Po Siu-ming, chief executive of Midland Realty's residential division, expects 8,235 units in new projects to hit the market in the fourth quarter.

He also estimates the fall in property prices will slow down in the quarter as developers will continue to launch new projects at favorable prices.

In the primary market, CK Asset (1113) will upload sale brochures of Seaside Sonata in Sham Shui Po today.

The project provides 876 flats. About 75 percent of them are two-room units, ranging in size from 474 to 507 sq ft. The rest are three-room units, measuring between 695 and 786 sq ft.

〈The Standard, October 4, 2019〉Rising property prices and lack of affordable housing has Hong Kong residents exploring the wider Greater Bay Area for property investment, although it remains to be seen if China's development plan can play a role in easing the city's housing crisis.

Property agents say they have noticed an increase in cross-border property investments since the release of the Greater Bay Area development plan earlier this year. This followed a change in mainland immigration laws last year that meant eligible Hong Kong residents could now choose to live as well as work on the mainland without the need for additional visas or approvals.

That change removed at least one of the obstacles for people looking for more affordable housing alternatives. But many remain, including access to quality health care, something of particular importance for members of Hong Kong's ageing population who are considering the mainland for retirement. Questions of quality aside, most would not be eligible for the Chinese state system having not contributed to it.

Jackson Ip, 60, bought a 560 sq ft flat for HK$2.5 million in Hong Kong soon after the handover in 1997, and it is now worth about three times that.

"I don't mind living in a relatively small flat. Hong Kong is my home and all my friends are here," said Ip, who has never lived on the mainland but has viewed several properties in multiple cities in the Greater Bay Area in recent years.

He added that he has been concerned about water and food safety across the border. He has not bought a property on the mainland because of doubts about the return on his investment due to "an oversupply of flats".

〈China Daily, October 3, 2019〉Hong Kong’s retail sales recorded their steepest year-on-year decline on record for a single month in August this year — plunging 23 percent to HK$29.4 billion ($3.77 billion) — compared with the same period a year ago, statistics showed on Wednesday.

The Hong Kong Retail Management Association warned this may not be the worst, saying it’s possible that local retail sales to be assessed would be worse than in August and September, with 30 to 80 percent of shops forced to close on Oct 1 amid violent protests.

Annie Yau Tse On-yee, chairperson of the association, said that with a higher probability of shops closing, the retail sector’s business may deteriorate, and there’s no hint it could rebound.

The extreme and violent acts of rioters on Tuesday forced up to 80 percent of shops to put up the shutters. According to the HKRMA, a prominent cosmetics company closed down its entire chain of shops on National Day — a traditional peak day for the business.

A revised estimate put the value of Hong Kong’s total retail sales for July down by 11.5 percent compared with a year earlier. For the first eight months of 2019, the value of total retail sales dropped 6 percent, compared with the same period in 2018.

August’s 23 percent plunge in retail sales was the worst Hong Kong has seen. A government spokesman said it was worse than that recorded during the Asian financial crisis in September 1998.

〈Asian Post, October 2, 2019〉Some Hong Kong homeowners are slashing asking prices for their properties - one by as much as 20 per cent - as the increasingly violent protests in the city make buyers reluctant to commit and prompt banks to reduce their valuations.

Yesterday, the owner of a 378 sq ft flat at La Cite Noble in Tseung Kwan O lowered the asking price by 7.1 per cent from HK$7 million to HK$6.5 million.

A day earlier, a 919 sq ft flat at Lake Silver in Ma On Shan was sold for HK$13 million, a HK$3.3 million, or 20.2 per cent, cut in the asking price.

"[Homeowners] want to cash in and think holding cash would be safer," said Fanny Chiu, chief senior sales manager at Hong Kong Property (Services), adding that the violence that marred Tuesday's National Day celebrations had further prompted some sellers to slash prices.

"Potential buyers also said they wanted to see what would happen on October 1 to decide whether to buy or not," said Chiu, noting that the current market sentiment was "acutely bearish".

Meanwhile, banks have been cutting valuations of used homes.

HSBC recently reduced the valuation of a 548 sq ft flat at Kingswood Villas in Tin Shui Wai by 7.7 per cent to HK$5.65 million.

Figures from the Rating and Valuation Department on Monday showed that Hong Kong's home prices declined 1.4 per cent in August, the fastest rate this year. The price index for lived-in homes slumped for a third successive month to 389.8.