The general sentiment in the leasing market was positive in 4Q2009, amid improved sentiment and a more optimistic economic outlook. The following is a summary of the Hong Kong commercial property market:

1.

Hong Kong boasts low corporate and income tax, a stable government, excellent geographical location and economic freedom. As such, many international companies have made Hong Kong their headquarters, contributing to traditionally high demand in the Hong Kong commercial property market. There are no restrictions on any individual or corporation, whether domestic or overseas, to own Hong Kong real estate. Detailed information can be found on the Hong Kong Inland Revenue Department website. Hong Kong commercial property market prices improved with capital values for strata-title office buildings in main business districts increasing in the 2nd quarter of 2009.

2.

Overall, the average Grade A office rental rate saw a mild increase of just 3.0% quarter on quarter (QoQ) to HK$42.48 per sq ft per month as at November 2009.

3.

Healthy demand for office space is expected in 2010 on the back of improving economic conditions, according to the CB Richard Ellis Hong Kong report. Rental growth will likely be muted in the first half of the year however, with areas such as Central and Causeway Bay to be affected by large pockets of vacancy as tenants relocate out of district, while areas like Tsimshatsui and Hong Kong East will be under pressure due to competition from new offices in Kowloon East. Rents are expected to remain somewhat flat over the first half of the year, with greater potential for growth in the second half.

4.

The Asia Pacific Region is expected to see a 2% increase in occupancy costs over the next 4 years. Hong Kong has become one of the most expensive business hubs to establish a business in and is expected to surpass Tokyo in regards to occupancy costs.  Even though occupancy costs per workstation have declined by 22% in 2009, Hong Kong still remains as one of the most expensive locations in the Asia Pacific Region. According to DTZ Global Occupancy Costs Report 2010, Hong Kong’s Total occupancy cost per workstation per annum is US$16,970.

5.

The current economic climate has made it increasingly difficult to obtain finance to support Hong Kong commercial property market investment. Asia Property Consultants assists clients obtain the most competitive international mortgages for their investment by working with international banks such as HSBC, ANZ Bank, DBS Bankand OCBC Bank.

For more information on the Hong Kong real estate, call our Hong Kong office at (+852) 8331 1911 or contact us at email@healyconsultants.com