HONG KONG, CHINA – Media OutReach – 31 July 2018 – The RICS (Royal Institution of Chartered Surveyors) Hong Kong Commercial Property Monitor Q2 2018, a quarterly sentiment index tracking trends in the commercial property market, indicated optimism and positive momentum for the occupier and investor markets. This was underpinned by the continued recovery of the retail segment. Sentiment surrounding offices and industrial segment remained elevated.
In terms of overall sentiment, the Occupier Sentiment Index (OSI) increased to 23 in Q2 from 14 in Q1. The Investor Sentiment Index (ISI) increased modestly from 19 in Q1 to 23 in Q2.
As for rental demand across sectors, demand for retail space increased in the occupier market since Q2 2013, with landlords offering rent free periods. Survey respondents continued to report an increase in the supply of office and retail properties available to let at a more modest pace in Q2, landlord incentives remained unchanged for these two sectors.
In the investment market, headline investor demand remains robust in office and industrial properties, driven by the increased foreign investment interest in Hong Kong Office space for the eighth consecutive quarter. Respondents reported that the demand for retail properties increased for the first time since Q4 2012, driven by domestic investors.
“Occupier demand increased from across all market segments in Q2, led by demand for office space. Notably, the outlook for rents over the next year was similarly bullish — respondents expect the biggest increase in rents (in net balance terms) since Q3 of 2011,” said RICS Chartered Surveyor Mr Frank F Wong MRICS. “The capital values in the overall market are still rising, indicating sustained positive momentum in the investment market”.
The outlook for rents was bullish, with the headline rents expected to increase 4.4 per cent over the next year. Respondents see capital values increasing over the next three and 12 months across all segments of the market.
The 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.
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