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Inventory of small units rose 60% q-o-q
According to an estate agency’s statistics, 1,397 units of Class A flats (saleable area less than 431 sq ft) were left unsold in primary market as of Q2/2017, surged 61.7% as compared to 864 units in the first quarter. Total supply of Class A flats were about 10,100 units, among which the units unsold accounted for 14%, reaching a 5-quarter high.

Industrial property price rose 3.7% in Q2
A total of 7 industrial transactions with a price over HKD 200 million were recorded in Q2/2017, according to market information. Driven by the refurbishment or redevelopment, the price of industrial property rose 3.7% quarterly. Uptrend of price is expected to persist given that the investment sentiment is strong.

Street shop at Nathan Road leased for HKD 140,000
It is reported that Shop C, G/F, Harilela Mansion, 81 Nathan Road, Tsim Sha Tsui, with a GFA of about 600 sq ft, has been leased to a boutique for HKD 140,000 per month, or HKD 233 per sq ft. The previous tenant was a jewellery and watch shop with a monthly rent of HKD 228,000, so the rent cut is around 38.6%.

Villa at MOUNT NICHOLSON sold for HKD 645 m
The tender of No.18 Villa, MOUNT NICHOLSON, with an area of 8,050 sq ft, was closed last Monday. The developer yesterday announced that the villa has been transacted for HKD 645 million, or HKD 80,124 per sq ft. The register of transactions shows that 9 villas have been sold since the launch of MOUNT NICHOLSON.

(Sources: Vigers Research and market news)

Only 1% residents believe now right timing to buy home
A market survey from a bank showed that respondents who are interested in property purchase fell to 14% after rising for three quarters. The proportion declined to the level around a year ago. Only 1% respondents believed that it is the right time now to purchase property, whilst respondents who have an opposite view increased to 79%, reaching a new high since the survey was conducted.

First-hand inventory rose to 9,003 units in Q2
According to market statistics, 9,003 units of new homes were left unsold in the second quarter of this year, increased by 1,442 units quarterly. Promotion of new launches is going to be red-hot in the second half of this year. It is expected the first-hand inventory will slightly increase 1,000 units to 10,000 units by end of this year, still maintaining at a moderate level.

No.36 Gage Street sold to Sino Land for HKD 65 m
According to the Land Registry’s data, the entire block of No.36 Gage Street, Central, with a GFA of about 5,000 sq ft, has been transacted for HKD 65 million, or HKD 13,000 per sq ft. This 6-storey residential and commercial property with an age of 50 years old was purchased by SHEENHONOUR LIMITED earlier this month. The board of directors in this company is formed by a number of executive directors from Sino Land.

More fitness centres seen in second-tier streets
Leasing transactions dealt with fitness centres have been frequently reported in livelihood areas and the second-tier streets in core districts. It is reported that G/F, 1/F & 2/F, 289 Sha Tsui Road, Tsuen Wan, with a total GFA of 11,941 sq ft, have been leased to a material arts and fitness center for HKD 680,000, or HKD 57 per sq ft. Tang Lung Street in Causeway Bay and Electric Street in Wan Chai also recorded similar transactions.

(Sources: Vigers Research and market news)

HKMA asks banks for details of developers’ loans
The Hong Kong Monetary Authority (HKMA) issued a questionnaire last week to ask banks to report the total loan amounts granted to real estate developers through corporate loan, project financing and other types of lending. In addition, the HKMA asked banks to disclose the developers’ outstanding balance of debt for the first time.

Rising trend of changing hotel to commercial building
The development of many hotel projects have been converted to commercial buildings given that the demand of office is much stronger than hotel. At least 7 cases of this kind of redevelopment have been reported in recent years and it is expected to provide a GFA of over 1.6 million sq ft.

High-floor of Lippo Centre sold for HKD 70 m
According to the Land Registry’s data, Unit 1, 37/F, Lippo Centre Tower 1, Admiralty, has been transacted for HKD 70 million, or HKD 30,435 per sq ft, in the middle of this month. The original owner purchased the property at HKD 7.1 million in 2003, making a book profit of HKD 62.9 million, or 8.9 times in 14 years.

Original site of Chor Lau Heung Restaurant sold for HKD 318 m
Veteran shop investor Tang Shing-bor, has bought the original site of Chor Lau Heung Restaurant at HKD 318 million for the purpose of leasing. The property is located at G/F & 1/F, Shaukiwan Centre, 407-409 Shau Kei Wan Road, Shau Kei Wan, with a GFA of 2,000 sq ft on G/F and 22,600 sq ft on 1/F. The transaction price is about HKD 12,900 per sq ft.

(Sources: Vigers Research and market news)

SINO LAND wins Whitehead land with over HKD 1.3 b
The Lands Department announced last Friday that the tender for a residential site at Whitehead, Ma On Shan, has been awarded to the highest tenderer, Sino Land, at a premium of HKD 1.383 billion. The maximum GFA of the site is over 119,000 sq ft and the accommodation value is HKD 11,587 per sq ft, slightly above the upper limit of market estimates.

New home sales slashed 60% over weekend
A total of 101 transactions were reported from 16 new launches over the past weekend. Yuen Long’s PARK YOHO Genova and Tsuen Wan’s Ocean Supreme accounted for 65 cases or 64.4% of the sales. Overall transaction volume slashed more than 60% as compared to the 256 cases at the previous weekend.

Second-hand sales remained low
Sales volume in most of the major estates were affected by the typhoon over the weekend. Each of the four major estate agencies only recorded 4 to 7 second-hand transactions in the ten major estates, lower than the previous weekend.

WeWork pre-leased LKF Tower
Peterson Group previously announced that the usage of 11/F – 28/F, LKF Tower, Central, with a floor area of 85,000 sq ft in total, would change to Commercial from Hotel. Refurbishment is in the progress. It is reported that the whole floor area has been pre-leased by WeWork at about HKD 60 per sq ft. WeWork is an American company which provides co-working space.

(Sources: Vigers Research and market news)

Yuen Long farm and storage land sold for HKD 510 m
It is reported that two land plots in the East of Tung Tau Industrial Area, Yuen Long, with an area of 145,000 sq ft and 98,000 sq ft respectively, have been sold to a capital group for HKD 510 million. The accommodation value was about HKD 1,940-2,230 per sq ft. Future usage of the land plots might change to residential given that the plots are surrounded by various housing projects.

Industrial transactions rising for 5 months
According to the Land Registry, a total of 442 industrial transactions were recorded in June, rose 8% m-o-m. The figure has not only been rising for 5 straight months, but also marked a new high for this year. Total consideration dropped by 36% m-o-m to HKD 2.563 billion, because the market was lack of large transactions.

Pre-leased 22,000 sq ft of One Taikoo Place
Redevelopment of Somerset House in Taikoo Place has been under construction for a few years and it has been renamed as One Taikoo Place. It is said that an entire floor of the project, with an area of about 22,000 sq ft, has been pre-leased by MetLife, an American insurance company, for approximately HKD 65 per sq ft.

A shop at Tseuk Luk Street sold for HKD 45 m
According to market news, Shop C, G/F & 1/F, 98 Tseuk Luk Street, San Po Kong, with a gross floor area of 3,062 sq ft, have been sold with a pre-existing lease for HKD 45 million, or HKD 14,696 per sq ft. The buyer, Mr. Francis Law Sau Fai is an experienced investor. Total monthly rent of the properties is HKD 93,500, and the rental return is about 2.5%.

(Sources: Vigers Research and market news)

Interest rate hike by major banks
Many major banks in Hong Kong have started to raise the mortgage rate last month since the Hong Kong Monetary Authority lifted the risk-weighted floor on new mortgages. It is reported that Chiyu Bank also followed the rate hike earlier this month, meaning that the eight major banks in Hong Kong have already increased the mortgage rate and the rate of H+1.28% will no longer be offered in the market.

EAA: No. of complaints in 1H17 drops 26%
The Chairman of the Estate Agents Authority (EAA), LEUNG Wing-cheung, announced that in the first half of 2017, the EAA received a total of 184 complaints, a decrease of 25.8% or 248 cases compared to the same period last year. Complaint cases about the sale of first-hand residential properties reduced 19.6% from 46 in 1H16 to 37 in 1H17.

Tang Shing-bor purchased a Central commercial building for HKD 433 m
According to market news, Jim’s Commercial Building in Central, has been transacted for about HKD 433 million. The buyer is Tang Shing-bor, an experienced investor. The 11-sotrey building has a total GFA of approximately 12,896 sq ft, with the GFA of each floor being over 1,000 sq ft. The average price is HKD 33,576 per sq ft.

A basket of old units in Ap Lei Chau sold for HKD 338 m
According to the Land Registry’s latest record, 15 residential units and 4 street shops located at 65-71 Ap Lei Chau Main Street, were sold to a capital group for HKD 338 million earlier this month. The properties are near the entrance of Lei Tung Station and opposite to Henderson’s new launch of H．BONAIRE.

(Sources: Vigers Research and market news)

Unemployment rate reached 3-year low
According to the latest labour force statistics released by the Census and Statistics Department, the unemployment rate (provisional) edged down from 3.2% in March – May to 3.1% in April – June, setting a 3-year low. The underemployment rate remained unchanged at 1.2% over the same periods.

Continental purchased Wan Chai Road commercial plot at HKD 1.18 b
Continental Holdings Ltd announced that the company has purchased a commercial plot on 232 Wan Chai Road at HKD 1.18 billion from Phoenix Property Investors and CSI Properties Ltd through company transfer. The plot has a gross floor area of about 87,000 sq ft and the accommodation value was about HKD 13,600 per sq ft.

The Peak & Southern District second-hand sales up 28% q-o-q
A total of 32 second-hand luxury properties were transacted in the Peak and Southern District in Q2/2017, up 28% q-o-q, according to an estate agency’s statistics. Total consideration decreased by 19.11% to HKD 3.7 billion. Some of the transactions through company transfer were not disclosed, otherwise the consideration amount should remain steady over the same period.

North Point Jolly House leased at HKD 53 psf, with 9% yield
It is reported that Flat B, Low-Floor, Jolly House, North Point, with a saleable area of 242 sq ft, has been leased out for HKD 12,800 or HKD 53 per sq ft of saleable area. The property is a one-room unit with broad views. The owner purchased the property at HKD 1.63 million in September 2008 and the rental return is over 9%.

(Sources: Vigers Research and market news)

Major estates reported 10 transactions over weekend
According to an estate agency’s record, the ten major estates reported 10 transactions over the weekend, increased by 7 cases w-o-w and achieved a 10-week high. The transactions were driven by estates with a smaller price tag. Kingswood Villas in Tin Shui Wai and City One Shatin recorded 4 cases respectively, and the prices were similar to market level.

Over 250 units sold in primary market during weekend
It is reported that over 250 residential units were sold in primary market at weekend. Active transactions were seen in the first launch of 63 Pokfulam in Sai Ying Pun, 13 units of which were sold out; all studio units first launched by PARK YOHO Genova in Yuen Long were sold out; and the price of two-bedroom units of Tsuen Wan’s Ocean Supreme slightly increased by 1%-2%.

Commercial sales reached a 17-quarter high in Q2
The latest statistics showed that a total of 829 commercial transactions were registered in Q2/2017, surged 1.18 times q-o-q and setting a new high for 17 quarters. Total consideration was HKD 14.017 billion. In the first half of 2017, a total of 1,209 commercial transactions were registered, involving HKD 20.148 billion and setting a 4-year high.

HKD 800,000 deposit forfeited for shop in Sin Tat Plaza
According to the Land Registry’s record, a buyer agreed to purchase an odd no. shop, G/F, Sin Tat Plaza, Mong Kok, at HKD 8 million in February but has failed to complete the transaction by end of last month, forfeiting about 10% or HKD 800,000 of deposit.

(Sources: Vigers Research and market news)

Tender for a residential site in Ma On Shan close today
The tender for a residential site at Whitehead, Ma On Shan, will close this afternoon. Market valuations of this sea view plot ranged from HKD 950 million – 1.31 billion, with an accommodation value of around HKD 8,000 – 11,000 per sq ft. The tender is expected to attract a number of developers and both PRC and local capital groups.

Proposal of Staunton Street withdrew by URA
Previously the Urban Renewal Authority (URA) has submitted an application for the amendment of Sheung Wan’s Staunton Street / Wing Lee Street Project to the Town Planning Board (TPB). The application is scheduled to be reviewed by the TPB today, however, the URA suddenly withdrew application after seeking opinions from communities.

Brighton Hotel sold for HKD 970 m
It is reported that the whole block of Brighton Hotel, located at 128 Lockhart Rd, Wan Chai, has been sold for HKD 970 million by Mr. Wong Kin Yip, Chairman of Midland Holdings. The transaction involved 69 guestrooms, one street shop and an entire retail floor on 1/F. The transaction price of each room was more than HKD 14 million and the expected return was over 3%.

Ocean Bay villa sold for HKD 145 m
According to market news, Even No. House, Ocean Bay, Stanley, with a saleable area of 2,453 sq ft, has been transacted for HKD 145 million, or HKD 59,100 per sq ft. The Land Registry’s data shows that the original owner purchased the property at HKD 98 million in August 2010, making a book profit of HKD 47 million (about 48%).

(Sources: Vigers Research and market news)

Joseph Yam: Fed balance sheet reduction could bring large impact
The Federal Reserve is expected to wind down its balance sheet from September. Joseph Yam yesterday said that its impacts to Hong Kong should be analysed from a macro perspective, covering asset price, mortgage loans and interest expenses. He also suggested home buyers to do a stress test.

Comprehensive review of rising construction cost
The Development Bureau yesterday submitted a document to the Legislative Council regarding the cost control for capital works projects. The result of a study shows that construction cost was mainly driven up by the higher standard and requirements imposed on works projects, coupled with labour shortage and ageing workforce. The government will conduct a comprehensive review of the requirements of public works projects.

Original site of Fung Lum Restaurant sold for HKD 300 m
Fung Lum Restaurant, a renowned restaurant in Tai Wai, was closed in March last year. It is reported that the shop was transacted for HKD 300 million, or HKD 30,000 per sq ft last month. The property is located at Shops B & C, G/F, 45-47 Tsuen Nam Road, Tai Wai, with a gross floor area of about 4,791 sq ft and a 5,200-sq-ft cockloft.

Shop in Causeway Bay renewed for HKD 1.1 m by Prince Jewellery
According to market sources, A Shop on 16 Kai Chiu Road, Causeway Bay, with an area of about 3,400 sq ft, has been leased to Prince Jewellery & Watch for years. Monthly rent in previous years rose to HKD 3 million and the leasing agreement is about to expire. It is reported that the leasing agreement is renewed for two years, with a 63% rent cut to HKD 1.1 million or HKD 323 per sq ft per month.

(Sources: Vigers Research and market news)