Rents for commercial properties in Hong Kong will fall sharply in 2020, according to London-based Knight Frank- an estate agency, residential and commercial property consultancy.
Rents for commercial properties in prime areas in Hong Kong such as Central, Causeway Bay, Tsim Sha Tsui, and Mong Kok will decline by 15 percent or more in 2020, the biggest drop since 2013.
Helen Mak, a senior director at Knight Frank told the media, “For foreign and local tenants, of course, they have to be cautious when deciding whether to open stores now, which weighs on rents.”
This follows the government’s announcement that retail sales by value contracted by a record 24.3 percent in October, year-on-year.
Currently, Hong Kong maintains the position of the world’s most expensive retail rental market. However, with the projected drop in rents, experts believe Hong Kong might lose its status.
According to media reports, street shops in Causeway Bay charged the highest rents in the world in the third quarter, at $2,544 per square foot a year.
Due to the political unrest in the former British colony, home transactions have dropped by more than half after peaking in May. Data from the Hong Kong Land Registry revealed that 3,447 transactions were completed in September and around 4,000 in October, which is way below from the average monthly sales in the last five years.
Home prices in Hong Kong also dropped for a fifth consecutive month in October. While prices dropped by 1.3 percent in October, it dropped by 1.7 percent in September. Knight Frank expects home prices to further decline in December.