Value of large-scale transactions up 20pc

Large-scale luxury residential and office transactions rose by almost 20 per cent in value in the first half of the year, compared with the same period last year, according to a survey by Jones Lang LaSalle.

The transaction value of deals worth more than HK$50 million each amounted to HK$7.12 billion in the six-month period, compared with HK$6 billion a year ago.

The property consultant said the rise in transaction value was due to some very large-scale deals being concluded during the period - specifically the HK$3.7 billion purchase of office floors at Two International Finance Centre in Central by the Hong Kong Monetary Authority and the HK$1.58 billion Royal Cliff deal in Repulse Bay by Lend Lease.

Large luxury residential property deals rose in value by 53 per cent to HK$2.34 billion, mainly due to the Royal Cliff transaction.

Luxury deals for the first half of last year were relatively smaller in size.

Large-scale office transactions amounted to HK$4.78 billion in the first half of this year, 7 per cent more than a year ago.

Analysts said some investors were keener due to the lower cost of funding and interest rates.

However, there were fewer transactions in these sectors than a year ago.

Demand for office development sites appeared to be lower as developers were cautious about replenishing their land banks, analysts said.

Jones Lang LaSalle's survey showed that large luxury property transactions amounted to HK$3.35 billion for the whole of last year, while office deals totalled HK$9.46 billion.

Meanwhile, a CB Richard Ellis survey found there were 11 en-bloc transactions of grade-B office buildings with a total value of more than HK$1.5 billion in the first half of the year.

It said investors had started to look at en-bloc grade-B properties to diversify their portfolios and in light of the series of cuts in interest rates.

Prices for grade-B buildings, with a reasonably high initial yield, also had fallen so their growth potential appeared attractive to investors.

CB Richard Ellis said the strata-title office sales market was active at the start of the year but had weakened since mid-March due to fluctuations in the stock market, the softening of the leasing market and the rapid increase in space from early surrenders.

Demand for office leasing fell dramatically in the first half due to the slowdown of the global economy, though the vacancy rate declined from 6.78 per cent early this year to 6.38 per cent at the end of June.

Overall, the grade-A sales market was quiet in the first half, with average price falling 3 per cent.

CB Richard Ellis expected the grade-A strata-title sales market to remain sluggish in the next few months, with prices set to fall 5 per cent, but grade-B whole blocks would continue to attract investor interest.