The commercial property market in Hong Kong has increased dramatically in 2012. Transaction volumes and values have reached their highest level since 1997 as a result of strong demand from investors after the government moved to impose special stamp duties on residential property transactions.
Transaction figures in the period to 8th December were up 23.5 per cent compared with 2011. The land registry reports it has received 8,399 agreement of purchase and sale registrations for commercial and industrial properties up to this date. In 2011 it had received 6,799 registrations. Sales values for the year were up over 49 per cent during the same period.
In late October, the Hong Kong government imposed a 15 per cent Buyer’s Stamp Duty (BSD) on residential purchases by companies and individuals who are not permanent Hong Kong residents. As a result, overseas investors turned their attention to the commercial property market.
The real estate agency Midland has collected data showing that the number of confirmor sales (deals where properties are resold before the original transaction has been completed) have increased by 89 per cent in the month following the introduction of the BSD. Sales values increased 140.4 per cent during that time, according to the agency.
Over 70 per cent of the transactions in the commercial and industrial sector have involved properties at the lower end of the market. Investors appear to be more interested in properties of this type as they represent a lower level of risk and are easier to resell later.
The rental market for commercial and industrial buildings in Hong Kong is also very active. Midlands’ rental index monitor for this sector is sitting at 122, and has risen by 19.4 per cent this year. The property agency predicts that sale prices will increase by an additional 20 per cent in the New Year. Rents are expected to go up by 15 per cent in 2013.
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