1)  Two Harbour Square will be joining Kwun Tong office market in Q2 2017

Industry News

According to the landlord, Two Harbour Square, 26 stories, 570,000 sq ft (52,954 sq m) new commercial development by Sun Hung Kai and Wong’s International, is targeted to complete in Q2 2017. Located at 180 Wai Yip Street, right next to One Harbour Square, the building boasts an attractive cruise terminal view. The building will have 20 office floors with floorplates ranging from 26,700 sq ft to 29,700 sq ft and F&B services on the first floor.

Research View

2017 is a landmark year for Kowloon East in terms of office space supply 2.1 million sq ft (0.2 million sq m) by net floor area of office space will come into the market in Kwun Tong and Kowloon Bay alone in this year. Of this total, 1.3 million sq ft (0.1 sq m) will be in Kwun Tong. Other major developments in Kwun Tong include; Mapletree Bay Point (561,000 sq ft / 52,119 sq m Net) and Lu Plaza (261,000 sq ft/ 24,248 sq m Net). In addition, Two Harbour Square is located adjacent to the Kwun Tong Action Area, in which the government intends to develop a large-scale commercial development that will contain one of the proposed monorail stations. The sizable floorplates and strategic location of the building have the potential to make this building an attractive choice for tenants looking for cost-effective relocation opportunities in Kowloon East.

2)  Plan D concludes the stage one public consultation for the pilot study on underground space development

News

Last week the Planning Department concluded Stage One of the public engagement session for the Pilot Study on Underground Space Development (http://www.urbanunderground.gov.hk). Stage Two of the public consultation will focus on seeking public comments on conceptual schemes and preliminary underground master plans.

Research View

The study aims to identify potential underground space development areas and types for the Admiralty, Causeway Bay, Happy Valley, Tsim Sha Tsui and Wan Chai areas. It also aims to formulate a master plan for underground space development in Hong Kong. While the size and the types of uses are currently unclear, it is likely that potential underground spaces could host a number of activities including community facilities, pedestrian connections, parking facilities, retail spaces and tourist attractions. Two significant locations that are under study include Kowloon Park in Tsim Sha Tsui and Victoria Park in Causeway Bay.

3)  Developer offers 100% stamp duty subsidy for buyers of its new development

News

Cheung Kong Property Holding has become the first developer to offer a 100% subsidy on buyer stamp duty and ad valorem stamp duty, which is equal up to 30% of the property value, for perspective buyers of eight of 30 units at its new residential development Crescendo in Yuen Long. The asking prices before discounts for the first batch of the 30 units to be offered for sale will be in the range of HKD22.09 million (USD2.85 million) to HKD37.64 million (USD4.85 million) or HKD14,964 (USD1,930) per sq ft to HKD20,314 (USD2,620) per sq ft. (Source: SCMP, 8 February 2017)

Research view

The proposed 15% stamp duty has had an immediate impact on residential property transaction volume. Residential transactions only accounted for 51% and 63% of all property transaction volume in December and January, compared to 75% of the whole 2016. Transaction volume in the primary market has contracted to 453 units and 644 units in December and January, down from the monthly of 1,399 units over 2016. We expect developers to maintain high asking prices while offering aggressive discounts and financing schemes to attract buyers, whereas the secondary market should remain subdued. We expect residential prices to increase 0-5% this year, as negative real interest rates should persist while banks are holding their mortgage rates level even as interest rates increase.