HONG KONG--(BUSINESS WIRE)--The downward trend continued for the commercial real estate market in Hong Kong, revealed by theRICS (Royal Institution of Chartered Surveyors) Hong Kong Commercial Property Market Monitor for Q2, 2016. For the fourth consecutive quarter, demand and prices for commercial properties dropped, and rental rents and capital values are set to fall further.
The RICS Occupier Sentiment Index (OSI) slipped further, from -24 in Q1 to -31 for the past quarter, while the Investor Sentiment Index (ISI) dropped four points to -28 in the same period. The OSI and ISI are constructed by taking the unweighted average of readings for three series relating to each market.
In the residential market, a softening in demand from China and weaker global growth are impeding the external side of the economy. Survey respondents foresee Hong Kong residential real estate prices to fall by 6.3% over next year and around 15% over the next five years.
Retail rents fell by two percent in Q1, and are expected to fall by up to 10% over the coming 12 months. The respondents expressed negative sentiment in Hong Kong’s retail property, where volume is being predicted to tumble eight percent in the coming year.
“Slow economic growth weighs on the outlook for rents and capital values,” said RICS Hong Kong External Affairs and Public Concerns Committee Member Mr Frank Wong MRICS. “Retail volume has continuously dropped for several quarters and we expect retail rent to remain low next year. For the prime area, we foresee retail rents in Tsim Sha Tsui and Causeway Bay falling by 13% over the next year.”
RICS Global Commercial Property Monitor is a quarterly guide to the trends in the commercial property investment and occupier markets. The sentiment index introduced by the RICS economic department allows tracking of commercial property trends. The report is available from the RICS website www.rics.org/economics
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