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67% of new lettings in Central come from PRC demand
HONG KONG, January 21, 2018 – Hong Kong's housing market continued to reach new heights in December, capping off a year that saw capital values advance at their fastest pace in five years. Capital values of mass residential properties increased by 1.3% m-o-m in December to lift full-year growth to 15.8%, according to JLL's Property Market Monitor released today.
Denis Ma, Head of Research at JLL, said: "Despite being at record high levels, we expect housing prices to continue to move higher as we enter the new year. Market sentiment remains high, as evidenced by strong sales in the government land and primary sales markets, and will be further buoyed by the recent stock market rally. We are forecasting housing prices to increase a further 10% in 2018 but as much as 20% if the current momentum in the market is sustained."
In the city's office leasing market, demand in Central continued to be dominated by PRC firms in December. Although new lettings fell by 32% m-o-m last month, largely owing to the traditional holiday season, PRC firms remained active expanding their footprints, accounting for about 67% of all new lettings in Central. The pending sale of The Center did not dissuade two PRC firms reportedly leasing 30,000 sq ft in the building.
Central's office rents grew a further of 0.3% last month as vacancy tightened to 1.7%. Rents in Hong Kong East advanced by 0.8% m-o-m, outperforming all other major submarkets.
The realization of pre-commitments at Lee Garden Three, issued with its Occupation Permit during the month, and new lettings in new builds in Kowloon contributed to net take-up in the overall market amounting to 449,500 sq ft in December.
Alex Barnes, Head of Markets at JLL, said: "Mainland companies are expected to remain active and be the key driver in Central's office demand in 2018. Rents in most of the city's major office submarkets are expected to edge higher in 2018 with Central leading the way, growing by up to 5% in 2018."
Source: Research, JLL
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