Fifth wave delays recovery of HK’s commercial property market
Amongst the hardest hit was retail, recording a 6.8% QoQ drop in high street shop rents.
It may take a longer time before things get better for the commercial property market, as the fifth wave slowed down its path to recovery.
Based on JLL's 2022 Q1 Market Review and Forecasts, the market was unable to dodge the pandemic wave with the investment and retail markets being the hardest hit.
In Q1 2022, the investment market saw a decline in volumes of commercial properties by 48.2% QoQ to $101.1b; whilst, in retail, rents of high street shops and overall prime shopping centres dropped 6.8% and 3.1% q-o-q, respectively.
On the other hand, the office market performed well in Q1 2022 amidst the fifth wave with overall Grade A office net absorption reaching 979,800 sq ft and rents rising 0.7%.
Looking ahead, JLL remains optimistic that the overall market will gradually pick up once stabilisation returns and business confidence is restored following the reopening.
In the office sector, JLL expected overall net absorption to improve due to the pre-commitment of new supply. Meanwhile, retail will be supported by leasing demand in F&B, grocery, mass-market fashion and sports & lifestyle trades, as well as experiential retail.
AS for the investment market, the analyst said: "Investors will remain conservative towards office assets as rental recovery will likely remain modest. They will shift their focus to assets with repurposing potential, such as hotels and industrial, or assets which offer higher investment yields, such as elderly homes, cold storage and modern warehouses."