It's no secret that recent years have seen Hong Kong's real estate market going into hyper-drive and despite the best efforts of Hong Kong's government to cool things down the inflation has shown little signs of abating, until now that is.
Recent Land Registry figures released for April indicate a drop in purchase agreements of 59% compared to the same period last year with land register searches down nearly 10% year over year. At the beginning of the year, Financial Secretary John Tsang launched a scheme that would see stamp duty on the majority of properties rise to 8.5%, nearly double the previous figure, in the hopes that the change would slow down the property market and usher in a new era of balance and restraint. In light of the recent figures it seems to be working.
Whilst it is still very early days and some analysts are still predicting a bounce back over the coming months, many are seeing this as the start of a downward trend. One report by Deutsche Bank indicates that property prices might fall by as much as 20% over the next 2 years and such dramatic fall would be sure to have a knock on effect when it comes to serviced office rates in the city.
A steep reduction in Hong Kong property prices would be a welcome change for the majority of businesses working in the city as recent years have seen it becoming increasingly hard to find adequate properties at reasonable rates. Indeed, several larger companies are finding it necessary to circumnavigate the rental sector altogether and start purchasing office towers independantly. This year alone has seen the likes of Manulife Financial Corp. and Hang Seng Bank purchasing commercial property with a combined value of over HK$18.8 billion which alleviates the issue for those companies that can afford to purchase whilst exasperating matters for small companies and sole traders.
So is the the start of a new era in affordable serviced office space in Hong Kong? It's probably a bit early to say, but with increasing pressure from both the business and residential sector to create a market in affordable, high quality premises and political will gaining momentum behind it, there's is every chance a change could be on the way.