COMMERCIAL

The Potential of Investment in the Hong Kong is Big with Increasing Demand. The commercial sale price is climbing and the market return rate is very strong.

2011 Hong Kong Total Office Buildings Supply

At the end of 2011, the total supply of office buildings in Hong Kong was 10.689 million square meters. Among them, Grade A office space accounted for 63%, Grade B office buildings accounted for 23%, and Grade C make up 14%. The core region of Hong Kong (Sheung Wan, Central, Wan Chai, Causeway Bay and Tsim Sha Tsui) consisted 58% of the total supply of offices.

Due to various environment improvements, the amount of business enterprises re-opens or expand in Hong Kong has steadily increased. Started business in Hong Kong, The number of foreign enterprises started in Hong Kong has been gradually rising since 2010.

Although global recession in 2009, China is still thriving and its economy growth has attracted many multinational companies to set up regional headquarters in Hong Kong. Through the "Mainland and Hong Kong Closer Economic Partnership Arrangement", these companies hope to take this as an advantage to enter the Mainland market. At the same time, Hong Kong has also become a springboard for Mainland enterprises to expand into overseas markets. In 2012, the demand for office space is growing so the space vacancy rate will fall. The rental market will be active and strong. Investors seek investment opportunities in the commercial market because of expected rising rents.

All Levels Office

The completion of office buildings was 124,100 square meters in 2011, which accounted for 93% of the overall supply of Grade A office space from non-core areas. Because of the overall economy improvement, the overall occupancy rose to 339,100 square meters and the vacancy rate fell to 8% reaching 859,700 square meters.

In the next two years, office completions will be maintained at the level of 151,500 square meters and 114,200 square meters.
New completions will continue to focus on non-core areas; the new proportional to the overall completions amount in the Central and Sheung Wan area is expected to fall from 20% to 14% from 2011 to 2012.

Office price has continued to rise from 2009 to 2011. All commercial building levels have a considerable climb in price. 2011’s fourth quarter sale price has increased by 24% from 2010’s fourth quarter. Rental price steadily rose during the year and the market return is very stable.

Grade A Office Building

2011 year end grade A office supply was 6.744 million square meters, accounting for 63% of all levels of office supply. 54% Grade A supply was located in Hong Kong Island, 36% in Kowloon and 10% in the New Territories.

Grade A office completion was 115,200 square meters; new development projects are all located in Yau Ma Tei, Tsim Sha Tsui, Mongkok, Kwun Tong and Eastern district.

2011 completion was 121800 square meters, supply mainly were from Kwun Tong and South district which accounted for 95% of completions. 71% of 2012 new supply will be concentrated in Central district and Wan Chai with the remaining 29% from Kwun Tong.

Grade B Office Building

2011 year end grade B office building supply was 2424700 square meters, accounting for 23% of all level office building supply. Hong Kong island makes up total supply’s 63% while 34% in Kowloon and 3% in the New Territories.

2011 Grade B completions were 7400 square meters, which is about 38% of previous year’s amount and all were located in Shan Shui Po. Occupancy area was 29000 square meters which amount is far above the new completions during the year. Year end vacancy decreased to 173200 square meters that takes up 7.1% of total Grade B office supply. In 2011, there were 29700 square meters of new completions from Sheung Wan and Central district. 2012 predicted completion amount is 60900 square meters that accounts for 54% of predicted supply, the remaining 46% are in Kwun Tong.

Grade C Office Building

2011 year end Grade C building total supply was 1520300 square meters accounting for all levels’ office building total supply’s 14%. Total supply’s 66% were located in Hong Kong Island, 32% in Kowloon and 2% in the New Territories. Completion amount was 1500 square meters that are placed in Wan Chai. Within the year, the occupancy reached 18100 square meters while vacancy amount was 110500 square meters which was total supply’s 7.3%. In 2012, Grade C building completion quantity is predicted to be 4900 square meters in Hong Kong Island, in which 65% located in Sheung Wan and Central.