INTERNATIONAL PROPERTY NEWS
Hong Kong Offices Are Most Expensive
H
ong Kong office space
emerged as the most
expensive to rent in
the world – twice as
expensive as prime commercial
property in any other global city.
Knight Frank’s outlook for global
commercial property showed that
prime office space in Hong Kong
costs US$70,000 (RM253,701)
psm, up significantly from second
place Singapore’s US$28,340
(RM102,713) psm.
INTERNATIONAL
PROPERTY NEWS
“The availability of land and land
values are the fundamental issues
that are driving rents and capital
values in Hong Kong and Singapore,
in particular,” said Darren Yates,
Head of Global Capital Markets
Research at Knight Frank.
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4000 Property Agencies Gave Up The Industry In Singapore
With the latest renewals, the top
10 realties here have found that
they have lost some agents from
end-2014. ERA Realty and PropNex
remain the largest agencies with
5,707 and 5,358 agents respectively
as at January 1.
High rise residence in Singapore
I
t is reported in Business Times
online that close to 4,000 real
estate agents have dropped out
of the industry while over 50
agencies have closed shop over
the past year due to the sagging
property sales in Singapore.
But this has not deterred some
3,006 new entrants from becoming
property agents, according to the
latest data from the Council for
Estate Agencies (CEA).
CEA stated recently that it has
licensed 1,369 agencies and
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registered 30,830 salespersons as at
January 1 this year.
This marks a fall from 1,425
licensed estate agents and 31,783
registered salespersons in the
previous year’s renewal exercise.
Some 3,959 salespersons did not
renew their registration.
Renewal of licences for agencies and
agents usually takes place at the
start of the year - there are still some
applications pending CEA approval.
PropNex Chief Executive,
Mohamed Ismail noted that
the lacklustre market has
become “a purging system
of the fittest agencies and
efficient agents”.
But it is not all doom for those who
exit in bad times. Given how overall
sales volumes have dropped by
some 30-40 per cent, they may be
better off in a job with stable income,
Ismail said.
Ismail noted that when sales are
poor, some agents find having to
make regular CPF contributions
and forking out money for
professional indemnity insurance
and Continuing Professional
Development courses deterrents
to renewing their CEA licences.
Meanwhile, according to ERA Realty
Chief Executive Jack Chua, with
the smaller agencies closing shop,
their agents have joined the bigger
firms. This, he said, are among
the reasons why ERA’s sales force
grew close to 10 per cent from a
year ago. But it is a 7 per cent drop
compared to end-2014, just before
the licence renewal exercise.
“These locations have a very
constrained supply of land,
combined with high population
densities and an abundance of
successful global companies with
an ability to pay higher rents.”
Tokyo was listed as the third most
expensive place to rent an office
space, followed by Paris. London
took on the fifth spot, while Zurich
and Geneva settled at the sixth and
seventh place respectively.
Meanwhile, Knight Frank expects
further growth in cross-border
investment this year, despite an
uneven global recovery and a strong
recent growth in capital values.
Given the significant weight of
capital targeting real estate, Knight
Frank expects global investment
volumes to rise by at least 10
percent to more than US$700
billion in 2015.
“Real estate capital markets
have been increasingly
buoyant and disconnected
from occupational
trends, which in turn have
mirrored the the global
recovery,” said Yates.
“Investor focus thus far has been
on transparency and liquidity,
which has played well to the
gateway cities such as London,
Paris and New York. But demand is
increasing for second and third tier
cities where competition for stock
is less intense and potential returns
are higher.”
-
H
ong Leong Investment
Bank (HLIB) expects retail
real estate investment
trust (REIT) to continue
outperforming office REIT this
year given the pricing power and
higher rental income potential from
positive rental revision.
The investment bank said other key
risk that could dampen the sector
included a bullish equity market,
improvement in the US economy
leading to a rise in US interest
rates and a significant slowdown
in economic activities dampening
rental reversion for industrial REIT.
HLIB, in a research note, said strong
rental revision for retail REITs would
be underpinned by sustained
consumption growth, albeit at a
slower rate, in the country.
“The REIT sector could
underperform in a bullish
market as investors
would prefer stocks
which give higher capital
appreciation,” it added.
“While GST will be a dampener for
retail REITs, we see no significant
impact as the government has
broadened the list of items in the
zero-rated and exempt supplies,”
it said.
Rounding up the top ten were New
York, Stockholm and Oslo.
On office REIT, it said the supply
glut for office space in Kuala
Lumpur is far from over and
upcoming mega projects will crea te
further dent on the problem.
Tan Tee Khoon, Executive Director of
Residential Services at Knight Frank
on the other hand noted that the
start of each year marks a game of
musical chairs as some salespersons
transfer from one agency to another.
Knight Frank is focused on seeking
out “career salespersons” who are
out to make a living in real estate
as a career, he added. Being a
full suite consultancy and agency
services firm also translates to “a
diverse basket of sales and leasing
opportunities available to our
salespersons”, he said.
Weaker Ringgit To Draw Singaporeans In
“The supply glut for office space in
the Klang Valley may result in rental
rates for offices to grow at a slower
pace or stagnate,” it said.
View of Hong Kong from Sky100 at
International Commerce Centre
Meanwhile, on industrial REIT,
HLIB said it maintained a “neutral”
view with a positive bias on the
industrial REIT given its softer
rental reversion and limited supply
coming in the market.
HLIB said an aggressive monetary
policy by Bank Negara Malaysia
might also cause interest rates
to increase thus making REIT less
attractive.
However, it said in view of the
subdued household financing
activities and rising downside risks
to domestic growth momentum,
BNM was expected to maintain an
overnight policy rate at 3.25 per
cent for the rest of the year.
“Hence, in a positive note, we
perceive the current economic
situation as favourable for the REIT
sector,” it added.
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