Hong Kong violence continues; Global economy is in a downturn; Enterprise deployment shrinks.
(By Leong Yuet Kam)
Hong Kong continuous political events, the gradually deteriorating global economic environment and the extremely negative investment market atmosphere, plus with no large-scale price reductions from commercial building owners, have made the commercial building trading to enter the "Ice Age". According to data from Midland Non-residential Properties and Midland Business data, 50 Class A commercial buildings in the whole September only recorded 1 transaction, furthered fell 86% by month, and it is the worst performance since there was record from The Financial Crisis in 1997, also it even challenges "the lowest in history.”
The only one transaction for commercial building unit recorded in September came from C-BONS International Centre in Kwun Tong. While Hong Kong Island continued the situation of no transaction for commercial building unit last month as the same in August, which means that it had been no transaction for two consecutive months, extremely rare, and Hong Kong Island only recorded one case for commercial building unit in the past three months since July.
Trading is in stalemate, and the transaction number is hard to rise.
The Chief Operating Officer and Commercial Director of Midland Non-residential Properties, Yung HungCheung expresses, Hong Kong is facing internal and external problems, and the global economy is in recession besides local political events, leading many companies to shrink the deployment, also bringing extremely negative impact on the office market. However, at present, most of the owners do not largely cut prices, and the price cut ranges are only 10% even if there are individual price cuts, leading the trading to a stalemate, with the situation is worse than the periods of the Financial Crisis in1997, the SARS in 2013 and the Financial Tsunami in 2008. He believes that unless the owners are willing to offer a large price cut, or the transaction for commercial building unit is still hard to boom.
The rent is falling, and there might be a price cut trend.
Yung HungCheung continues, relative to the selling price, the owners temporarily inclined to lower rents, and the rental yield would be suppressed if the rental downward trend will start later, then there would be more on sale cases with price cuts, accelerating the decline speed of commercial prices.
The Data Research Department Analyst of Midland Non-residential Properties, Chen HoCheung added, the commercial building has the worst performance among three aspects of industrial, commercial and store properties, and many potential buyers of store properties are attracted making the transaction number to be maintained due to many owners are willing to cut prices largely although negative factors in store property market are many recently; But commercial building property owners mostly are not willing to cut price, leading the trading to nearly stop.
According to data from Midland Non-residential Properties Data Research Department and Midland Business data, 50 Class A commercial buildings in September recorded a sharply down by 86% per month than 7 cases in August, and the transaction area was even 1,279 sq ft, sharply down over 90% per month. Although the transaction information of the 50 overall commercial buildings only covers the period from 2016, but some of the 50 overall indexing Class A commercial buildings still recorded many cases per month in early before the completion of the buildings, so the performance of last month had actually hit a new low of more than 20 years.
