1.

According to Colliers International October 2008 market report the current Hong Kong commercial property cycle will not continue along the same growth due to a slowdown in the demand side of the market. If economic environment deteriorates further, Grade A office rentals are anticipated to come down by 15%-20% over the next 12 months.

2.

Although there was no additional new office supply during the third quarter of 2008 in the traditional business districts of Hong Kong island, the average vacancy rate edged up to 4.3% from 3.2% in the previous quarter.

3.

The graph to the right from the Rating and Valuation Department (RVD) shows the history for the price indices for the different commercial property sectors. Apart from a stalling in 2005, price indices have increased consistently from 2003 until the end of 2007. During 2007, the office sector increased at a faster rate than retail.

4.

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 strong 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

5.

While vacancy rates are low in the core business districts (less than 2% in Central), some companies are moving out of the these areas due the rents reaching a level they can not pay. This trend resulted in an increase in vacancy rate in Central from 1.15% in May 2008 to 1.54% in August 2008.

6.

Additions to supply in the Hong Kong commercial property market during the third quarter of 2008 were not on Hong Kong island but in Kowloon East. Manhattan Place and Landmark East were completed in August and September 2008 rsepectively. Combined, they provide approximately 2 million square feet of office space. As not all the space has been occupied, the vacancy rate for Kowloon East increased from 3.2% to 4.3% in the third quarter of 2008.

7.

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 Bank and 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