The economy of the whole environment is sluggish, and Hong Kong's commercial buildings and shop markets have not improved after customs clearance?
Looking back at the overall Grade A office vacancy rate in 2023, it rose to 16.4%.
Image source: Internet
The floor area involved reached a record high of 14.3 million square feet.
What is this concept?
The vacant floor area is equivalent to 7 buildings of IFC2 in Central.
Image source: Sing Tao Daily
According to CBRE's 2024 Hong Kong Commercial Real Estate Market Outlook, various sectors of Hong Kong's commercial real estate market will show different trends in 2023.
Residential, commercial, office, and industrial buildings, which one performs best?
Image source: Internet
Chan Kam Ping, head of the bank's research department in Hong Kong, said that the recovery of the commercial real estate market was slower than expected last year.
With financing costs hitting a 22-year high, negative returns have deepened, investment intentions have halved, and investment volumes have hit a 15-year low.
Doesn't sound promising?
However, the report also pointed out that the leasing activity of Grade A office buildings in 2023 was mainly driven by relocation and consolidation demand, but the leasing trend fell in the fourth quarter, with total leasing volume falling by about 39% quarter-on-quarter to about 754,000 square feet.
Image source: Internet
In fact, as the mainland economy strengthens, Hong Kong's economy will continue to recover in 2024, and potential interest rate cuts will improve the investment market dynamics.
Overall real estate demand is expected to grow modestly this year.
The annual transaction volume reached 4 million square feet, an increase of approximately 8.7% year-on-year.
Image source: Hong Kong Economic Times
In addition, this year, the Hong Kong government restarted the investment immigration program, including non-residential real estate in the assets allowed for investment, which is also expected to promote the transaction of factories and office buildings.
However, most businesses will remain cautious about controlling costs, high vacancy rates will keep landlords competitive, and leasing will continue to benefit tenants, with rents expected to fall by another 5 to 10% this year.
In the retail market, retail leasing is expected to rebound strongly for the full year, despite a slowdown in retail leasing growth in the second half of 2023.
In 2023, the overall leasing volume reached a record high of 1.5 million square feet.
Image source: Hong Kong 01
F&B, cosmetics and pharmacies continue to expand on the streets of the core area to meet the growing number of tourists.
Tourists' spending patterns are also slowly changing, and most people come to Hong Kong no longer simply to buy luxury goods, but only luxury brands to maintain a wait-and-see attitude.
Image source: Sing Tao Daily
However, the increasing number of well-known mainland brands entering Hong Kong also proves that the number of shops is indeed rising modestly at the market level.
Mong Kok is at a premium, and the same is true for the rent in the central plaza of the bank, where the first store of Mixue Bingcheng is located.
Image source: Sing Tao Daily
Mixue Bingcheng needs to pay 200,000 yuan per month.
It means that just paying rent, at 9 Hong Kong dollars a cup, you need to shake more than 20,000 cups of milk tea every month to pay the rent.
In addition, the market has recently recorded another transaction of leasing "flag-planting" shops of mainland food and beverage brands in Hong Kong.
A well-known noodle brand in the Mainland, Hefu Lao Noodles, has entered the ground floor shop on Russell Street at a monthly rent of 300,000 yuan.
Image source: Hong Kong 01
If this shop is estimated according to the price of food in the mainland, this shop will also need to sell 10,000 bowls per month to pay the minimum rent.
For 30 days a month, it is open 12 hours a day, and it has to sell 28 bowls per hour to keep it flat.
However, these brands are not drunk on alcohol, and the branches in Hong Kong may not be very profitable, but they will help the brand go international.
Image source: DONEWS
On January 2, Mixue Bingcheng submitted a listing application to the Hong Kong Stock Exchange on the evening of the same day.
Hefu Lao Mein, which is about to enter Hong Kong, is also interested in listing in Hong Kong.
In the future, Hong Kong's role as a bridgehead will remain unchanged and will continue to attract mainland enterprises to Hong Kong.
Because Hong Kong has a sound legal foundation and capital can flow freely, more mainland brands will set up shop in Hong Kong in the future.
Image source: Hong Kong 01
Strong rental demand is also ensuring that the vacancy rate of shops on the streets of the core area is declining.
Image source: Ming Pao
Looking ahead to 2024, the mainland's economic recovery, the expected appreciation of the renminbi and the potential interest rate cut will support tourists and local consumption, and street shop rents in the core areas are expected to grow moderately by about 5% this year.