Positive signs in secondary sales support around 5% growth in home prices in Q1

  • As of February, home transaction volume has stayed above 5,000 S&Ps for six months in a row
  • Proportion of secondary home sales in 2018 so far went up to 81% from 70% in average in 2017
  • Sale of land sites and offices accounted for the biggest share in the total property investment consideration this quarter, signifying strong interest. 


HONG KONG, CHINA – Media OutReach – 22 March 2018 Cushman & Wakefield, a global leader in commercial real estate services, pointed out that the home transaction volume remained solid at above 5,000 S&Ps in the active Q1 2018 in face of the rising home prices, with around 5% of growth for certain popular estates. Buzzing with activity, the property investment market recorded 109 major deals in Q1 thus far. Sales of land sites and en-bloc offices accounted for the largest share in terms of consideration.

 

Property Sales and Purchase Agreements (S&Ps) recorded monthly growth in both January and February to above 7,000 S&Ps, extending the trend since last September. For home sales, the February residential S&Ps rose by 4% month-on-month to 5,482 — The best February record since 2015. Despite the Chinese New Year holiday, such increase showed a strong buying interest encouraged by new projects launch (eight in total in 2018 so far) and rebounded sales in the secondary market.

 

Mr Alva To, Cushman & Wakefield’s Vice President, Greater China & Head of Consulting, Greater China commented, “ The share of secondary sales in January and February has gone up to around 80% from 70% in average in 2017, indicating a healthier development of the market. Given the lesser impact of the holiday effect and no major change in housing policy as announced in the latest Budget, the unleashed buying power will further stimulate the share of secondary sales in March.

 

On prices, the uptrend in home prices that began in April 2016 remained unchanged. As of mid-March, the price of representative estates such as City One Shatin and Taikoo Shing went up by 4.8% and 5.8% YTD respectively, and 5.2% and 5.6% up for Bel-Air Residence and The Harbourside, respectively over the same period. Compared with the last trough in April 2016, prices of City One Shatin rose by 54.4%, compared with 47.1%, 48.4% and 46.9% for Taikoo Shing, Bel-Air Residence and The Harbourside.

 

Better price growth for the smaller lump-sum homes revealed a keen demand from first-time buyers. In the latest Budget, the government’s efforts in raising the private sector supply to an annual average of 20,800 units in 2018-2022, from a level of 13,500 units between 2013 and 2017, sent a positive signal to the market that supply shortage is easing. Mr To said, “Such an increase from a low basis in recent years is not expected to overwhelm the market but would help match the keen demand from buyers of various profiles.”

 

In the property investment market, 109 major transactions (each with a consideration of over HK$100 million) were recorded in Q1 thus far, with a total consideration of HK$82.1 billion. The average deal size shrank from HK$1.11 billion in Q4 2017 to HK$0.75 billion in Q1, but given the total consideration in Q4 ballooned due to rare mega transactions including the sale of 8 Bay East (HK$9 billion) and Link REIT’s retail portfolio ($23 billion). the gap between the two quarters may narrow further given Q1 has not ended yet.

 

Luxury residential and strata-title office sales accounted for more than half the major deals in Q1. In terms of consideration, however, sites (39%) and en-bloc offices (18%) accounted for the largest share, with the sale of land sites in Kai Tak and Tuen Mun, as well as the changing hands of Grade A office development at 18 King Wah Road being some of the most significant deals.

 

Mr Tom Ko, Cushman & Wakefield’s Executive Director, Investment & Advisory Services in Hong Kong, commented, “Commercial sites will be the focus of the investment market this year, as we expect the upcoming sale of the XRL site will cast a similar effect as the Murray Road site last year on stimulating office prices. Landlords remain aggressive and so the number of deals will trend low, but the price outlook for offices is solid on the back of keen investor and user demand.”

 

About Cushman & Wakefield

Cushman & Wakefield is a leading global real estate services firm with 45,000 employees in more than 70 countries helping occupiers and investors optimize the value of their real estate. Across Greater China, there are 20 offices servicing the local market. The company was named the top China real estate services firm in four categories of Overall, Valuation, Agency/Letting and Research by Euromoney’s 2017 Survey. Cushman & Wakefield is among the largest commercial real estate services firms with revenue of $6 billion across core services of agency leasing, asset services, capital markets, facility services (C&W Services), global occupier services, investment & asset management (DTZ Investors), project & development services, tenant representation, and valuation & advisory. To learn more, visit www.cushwakecentennial.com, www.cushmanwakefield.com.hk or follow us on LinkedIn (https://www.linkedin.com/company/cushman-&-wakefield-greater-china)


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Jennifer Au

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jennifer.ms.au@cushwake.com          

 

Peggy Mak / Penn Leung

Creative Consulting Group

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