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Property News Weekly Digest
2020/4/4
〈Asian Post, April 4, 2020〉Hong Kong's retail landlords might have to cut rents by 50 per cent to attract new tenants as the coronavirus pandemic worsens, according to one of the city's richest developers.

"For these few months, you'll probably see a 50 per cent cut in rents for the retail sector, or even more," Edwin Leong Siu-hung, founder of property developer Tai Hung Fai Enterprises, said in an interview.

"Nobody will want to start a business in these few months, and nobody's going to open a retail outlet unless the rents are so attractive. Otherwise, you just won't do it."

Retail sales in the city fell 44 per cent in February from a year ago to HK$22.7 billion, a 13th consecutive month of declines, according to government figures released on Tuesday.

It was the steepest single-month fall on record, caused mainly by the impact of Covid-19 on tourism and spending, a government spokesman said.

This worsens the outlook for a sector that has already been battered by months of anti- government protests. Chief Executive Carrie Lam Cheng Yuet-ngor has also urged landlords to waive shop tenants' rents.

〈Asian Post, April 3, 2020〉New home sales in Hong Kong in March sank 40.4 per cent from the month before to 594 units, the lowest since December 2018, according to Centaline Property Agency, in the latest sign of the strain the coronavirus is putting on the property market.

Overall transaction value in the first quarter fell to a four-year low of HK$100.09 billion, Centaline said, with its Wednesday data coming a day after other figures showed secondary home prices in the city recorded their steepest drop in 15 months in February.

"The downward adjustment in home prices is not done yet," said Wong Leung-sing, associate director of research at Centaline, adding that the Covid-19 pandemic had dampened market sentiment and forced developers to defer project launches.

Already struggling since last year's street protests and the economic fallout from the United States-China trade war, Hong Kong's property market is facing difficulties across all its components - homes, offices, shops and restaurants and even government land sales.

On Wednesday, a plot of residential land about half the size of a basketball court in Mong Kok was bought by Hong Kong-listed Eagle Legend Asia for HK$85.9 million in a government auction, 20 per cent less than the lower end of market expectations. The price per square foot of HK$3,512 was the lowest since June 2004.

〈ET Net News, April 3, 2020〉Grade A office rents recorded their worst quarterly performance since 2Q/2009, with overall rents falling by 5.2% QoQ in the first quarter of 2020. Both Wanchai / Causeway Bay and Central (-6.2%) recorded the largest rental falls among all sub-markets, followed by Kowloon West (-5.1%) and Tsim Sha Tsui (-4.7%), according to real estate advisor Savills.

Decentralisation remains a popular strategy for office tenants looking to cut costs.

Given Central's 80% premium over the rest of the market, there is still strong cost-pushpressure on tenants to relocate to other business districts on Hong Kong island. Savills sees a similar trend in Kowloon where tenants are leaving core districts for less prime locations. Downsizing has also been in evidence.

In slightly more positive news, e-commerce firms are thriving as the online environment attracts more patronage after the social unrest and more recently because of the need to limit social contact.

Savills expects to see more office demand from such businesses involved in providing a wide range of services from shopping and tutoring to social media.

The vacancy rate increased sharply during the first quarter of 2020, from 4.65% in December 2019 (2.74 million sq. ft net) to 5.22% in March 2020 (3.08 million sq. ft net). Island East (1.6%) remained the district with the lowest vacancy while vacancy rates in Central and Wanchai / Causeway Bay rose from 3.8% and 4.6% to 4.6% and 5.3% respectively.

〈The Standard, April 2, 2020〉A land plot in Mong Kok was awarded for only HK$85.9 million, or around HK$3,658 per square foot, hitting a 16-year low for the urban area.

The tender of the non-industrial site, Kowloon Inland Lot No. 11238 at Reclamation Street and Shanghai Street, was awarded to Eagle Legend Engineering Management Consulting Company, a subsidiary of Eagle Legend Asia (0936).

Market surveyors had valued the plot at between HK$120 million and HK$290 million, or HK$5,000-HK$12,000 per sq ft.

The plot has a total site area of 2,718 sq ft and a buildable area of 24,462 sq ft.

The average price was the lowest since local developer Chinachem Group won the bid for a plot in the district at around HK$2,961 per sq ft in 2005.

Thomas Lam Ho-ma, executive director of Knight Frank, said the price reflected developers' concerns about the downward economy after the coronavirus pandemic.

Meanwhile, more price cuts across the property market were recorded, with a 2,269-sq-ft office at 9 Queen's Road, Central, rented out for only HK$57.5 per square foot, a 6-year low for the skyscraper.

Japanese discount store Don Don Donki was said to have rented a 10,000-sq-ft shop in Central for a monthly rent of HK$1.2 million, nearly half the previous price. Also, the rent for a house at Regalia Bay in Stanley slumped by 25 percent from its peak six years ago to HK$98,000 per month.

〈China Daily, April 1, 2020〉Mainland property showing Signs of life
Sales offices reopen and construction sites restart, handing developers a respite, though analysts note the recovery is still limited to a few cities

The mainland's private housing market is springing back to life as more sales offices reopened across the country following a nationwide shutdown, saving developers from a deeper financial slump this year.

Transactions in at least eight large cities - Shenzhen, Chengdu, Fuzhou, Hangzhou, Huaian, Yangzhou, Jiaxing and Shantou - indicated buyers had returned in recent weeks, with volume reaching or surpassing the average levels in the final quarter of 2019, according to China Real Estate Information Corporation (CRIC).

The rebound comes as a relief to the industry after measures to contain the coronavirus pandemic kept buyers away and almost froze the market. Developers have since offered discounts to boost sales and avert a liquidity crunch as factories resumed production and lockdowns eased.

"Prices of some new projects were capped [by the government], lower than the market price, so some projects are popular" with the buyers, said Yang Hongxu, deputy head of E-House China Research and Development Institute.

"Restrictions on housing and land prices also created some room for arbitrage, so people are rushing to buy houses and developers scramble to buy land.