• Sat
  • Aug 30, 2014
  • Updated: 6:47am

Property sees some stability

PUBLISHED : Thursday, 13 April, 1995, 12:00am
UPDATED : Thursday, 13 April, 1995, 12:00am

OFFICE prices and rents will fall a little further, while residential prices in prime locations have bottomed out, according to Vigers Hong Kong executive director Bruce Walker.


During yesterday's first-quarter review of events in the territory's property market, Mr Walker said: 'We have a little lower to go before we stabilise.


'I think we have almost reached stabilisation in the residential market and in the office market we have a little way to go yet.' He said the $9,000 per square foot price tag for floor space in the Lippo Centre and the $10,500 being charged at 9 Queen's Road Central were too expensive.


Prices would have to drop a further $1,000 or so to attract buyers.


Mr Walker said investors would come back into the office market when they could reap yields of eight per cent on achieved rents.


'That will represent fundamental value,' he said.


Yields were not there yet, but they were getting more attractive.


Investors would return to the market realising that buying property was better value than leaving their money in the bank, he said.


Mr Walker said that while prices would continue downward, there would be no dramatic plunge in the short to medium term.


'We are not going to see a huge upside or downside to prices in 1995,' he said. 'I don't think prices will fall dramatically.' In the office rental market, he said rents would come down a little more, but were unpredictable.


He said speculators who inflated office prices last year had for the most part left the market.


They had been replaced by end-users and investors buying because of fundamentals, which was a healthy sign.


'The volatility of the market has not been all that great,' he said, adding that it looked as though 'things were settling down' in the mass residential sector.


He said the good news for developers was that there was a huge demand for housing in Hong Kong.


The bad news was that the 'price must be right'.


Prices for homes close to the MTR and the KCR stations had just about reached the right mark, he said.


'For developments like Royal Ascot or the Kornhill development, prices must be right near the bottom,' he said.


In the more remote locations, prices would continue to fall.


Buyers had a large quantity of better located flats to choose from, and there was not enough difference in price to lure home buyers to the more remote locations, he said.


In the luxury rental market, home rents of more than $100,000 a month would continue to fall.


'The days of the big bank giving huge allowances are ending,' Mr Walker said.


Expatriates arriving in Hong Kong were now more likely to have housing budgets of between $40,000 and $60,000, he said.


Vigers retail director Albert Chan said that while many rents in the core shopping districts were too high, there was little sign that they would be coming down because of the lack of supply.


Mr Walker said that if there were no unforeseen political upheavals, the property market would remain calm.


'Barring any external factors, we are going to see a level market,' he said.


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