Q4 2016 RICS Commercial Property Monitor: Strong Demand from Mainland China Supports Office Sector Outlook
The Q4 RICS (Royal Institution of Chartered Surveyors) Hong Kong Commercial Property Monitor showed a slowdown in the decline in occupier and investor segments as hypothesised by built environment professionals. The sentiment surrounding retail remained downbeat with sustained weakness, while the office sector experienced a rebound in recent quarters.
RICS’ two major headline indicators – the Occupier Sentiment Index (OSI) and the Investor Sentiment Index (ISI) – extrapolated this quarter with a +5 for both indicators. These indicators are constructed by taking the unweighted average of survey respondents’ analyses for three series relating to each market.
Demand for office space remains at or near cyclical highs with a forecast for both capital values and rents revising sharply higher from Q3 to Q4. For the office occupier market, anecdotal reports state that mainland Chinese firms are paying above market values for prime office floor place. A 6.3% appreciation on capital values (vs 2.7% in Q3) and a 5.5% increase on prime office space rents (vs 3.2% in Q3) are expected in 2017.
“The confidence in prime office space is largely a result of high demand from mainland financial and investment companies that are opening and expanding their offices in Hong Kong”, said Mr Frank Wong MRICS, RICS Hong Kong External Affairs and Public Concerns Committee Member, he added, “Hong Kong offers these companies a more corporate-friendly environment with a close proximity to mainland China.”
“Various multinational and foreign financial companies are relocating their offices from Hong Kong Island to Kowloon East. As firms are displaced from prime locations, secondary office space receives a boost in capital value and rent forecast,” Mr Wong said.
At a headline level, foreign enquiries remained flat in Q4 and were largely unchanged from Q3. Most contributors (47%) continued to see no change in credit conditions. This metric has been relatively unchanged for the past nine quarters. Interestingly, the US dollar’s appreciation has also increased the premium of Hong Kong dollar assets to foreigners.
RICS Hong Kong Commercial Property Monitor is a quarterly sentiment index tracking trends in the commercial property market. It is a leading indicator for global investment and occupier markets. The full report is available at www.rics.org/economics.
Confidence through professional standards
RICS promotes and enforces the highest professional qualifications and standards in the development and management of land, real estate, construction and infrastructure. Our name promises the consistent delivery of standards – bringing confidence to the markets we serve.
We accredit 125,000 professionals and any individual or firm registered with RICS is subject to our quality assurance. Their expertise covers property, asset valuation, real estate management; the development of infrastructure; and the management of natural resources, such as mining, farms and woodland. From environmental assessments and building controls to negotiating land rights in an emerging economy; if our members are involved the same professional standards and ethics apply.
We believe that standards underpin effective markets. With up to seventy per cent of the world’s wealth bound up in land and real estate, our sector is vital to economic development, helping to support stable, sustainable investment and growth around the globe.
With offices covering the major political and financial centres of the world, our market presence means we are ideally placed to influence policy and embed professional standards. We work at a cross-governmental level, delivering international standards that will support a safe and vibrant marketplace in land, real estate, construction and infrastructure, for the benefit of all.
We are proud of our reputation and work hard to protect it, so clients who work with an RICS professional can have confidence in the quality and ethics of the services they receive.
Disclaimer: If you have any questions regarding information in this press release please contact the company added in the press release. Please do not contact pr-inside. We will not be able to assist you. PR-inside disclaims the content included in this release.