Published on 07 March 2006 at 10:14 pm
Filed in Property News for Hong Kong » Hong Kong Property Investors Play Waiting Game
There’s no doubt about it according to Colliers International, 2006 will be a strong year for growth and demand in Hong Kong – but property investor interest is restrained and will remain so until the second half of the year.
Restraint and caution are being urged while uncertainty relating to interest rate increases persists – but according to the Hong Kong real estate experts at Colliers’ Research & Consultancy Division, the second half of 2006 will be second only in terms of demand, volume and price increases to the record year that was 2005.
The most exciting sectors for property investors will be the industrial property sector – in particular the industrial office sector - and the retail sector, especially in terms of the increase in capital appreciation of assets owned. Institutional interest in the property market in Hong Kong is mainly responsible for driving demand in these two particular sectors, and it is predicted that if the Western corridor does open it will have a strong and positive impact on both rental demand and sales volumes in these two market sectors.
In 2005 the most exciting movements in the property sector in Hong Kong took place in the rental market for Grade A office space; demand peaked, supply dwindled and rental rates increased by an incredible 75%. Because rates rose so sharply, many seeking space were forced away from the main centres of business in search of affordable premises which in turn pushed demand outwards and restricted supply in many other parts of Hong Kong which forced rental rates up across the region.
This decentralisation of office space has now subsided as rental rates have evened out and Colliers International predict rental rate increases of around 30% in 2006 and capital growth of up to 5%.
For the greatest potential for capital appreciation from investment property in Hong Kong in 2006 all eyes are on the industrial property sector as previously mentioned, with the retail sector also predicted to rise in value by up to 15%. Most market activity will occur in the second half of 2006 with consolidation and patience taking precedence in the first half of the year; growth figures during the third and forth quarters will show that confidence has been recovered and demand is sustainable.
For those interested in residential investment properties for sale in Hong Kong, 2006 will return some capital appreciation and limited rental rate increases according to Colliers International’s Director of Residential Sales…but again, activity and interest will be restricted until the second half of the year when interest rate speculation dies down and it becomes more apparent to the general public that the supply of new property stock is actually falling below demand and creating an interesting environment for those wishing to invest in property in Hong Kong.
