Despite the COVID-19 pandemic and the social situation in Hong Kong, the housing market has been resilient and the being the least affected sector. With Wheelock Properties winning the last plot in the MTR’s Wong Chuk Hang Project, Stella Ho of Valuation & Advisory Services sees developers still have strong confidence in the housing market. For the retail sector, Cynthia Ng of Retail Services observes that F&B retailers continue to take up space by taking advantage of the current affordable rental, which has shifted the retail rental landscape. Read on to find out the market observations from our experts.
Prospect of the Southern District
Wheelock has won the residential land plot bid for the Southside Package at MTR Wong Chuk Hang Station (503,750 sq. ft.). Wheelock is expected to sell 750 high-end flats at around $30,000 per sq. ft. The bidding was more aggressive than previous packages as this is the last land parcel of the Southside Package. The average land price in this area was estimated at HK$20,000 per sq. ft.
The Southside is one of the key projects of the "Invigorating Island South" initiative under the 2020 Policy Address. It is a large-scale comprehensive development comprising a total of six development packages with private residential developments providing about 4,900 flats and a shopping mall spanning five retail floors of nearly 510,000 sq. ft.
Wheelock’s aggressive bidding indicates that developers have strong confidence in the housing market in Hong Kong despite the COVID-19 epidemic and political situation. We believe that the government will draw on its experience over the last 10 years from the “Energizing Kowloon East” initiative. Thus, we expect the Invigorating Island South initiative to be accelerated; for example, the government has already adopted standard rates in respect of lease modification applications.
Benefitting from the government’s initiative, the property prices in the Southern District are expected to lead the Hong Kong property market in the near future. We look forward to seeing the change in the Southern District incorporating different elements and new ideas for working and living.
Strong F&B leasing demand changing retail rental landscape
The shifted retail rental landscape in Hong Kong continues to allow more F&B openings on the market especially in the local areas of Mong Kok. The G/F and M/F at 59-61 Sai Yeung Choi Street South is newly leased to Ngan Lung Restaurant, paying HK$400K a month for the 3,500 sq. ft. shop. This is almost a 82% drop from the previous lease by Lukfook Jewellery at HK$2.2M per month. At 23 Soy Street, the landlord has also sub-divided the ground floor space (ex-Adidas space) into two units and newly leased to a cha chaan teng for approximately 3000 sq. fts and Water Gate Chicken Rice for approximately 2,000 sq. ft. On the Hong Kong Island side, Five Guys has agreed to lease 6,700 sq. ft. on 1/F of Emperor Watch and Jewellery Centre for HK$670,000 a month at HK$100 per sq. ft. This is 58% lower than the previous lease at HK$1.6M by cosmetics retailer Sa Sa International Holdings. The trend of more local and diversified tenant mix taking over traditional high street locations which were previously occupied by goldsmiths and large international brand operators will likely to continue for the remainder of 2021.