Hong Kong needs clarification of commercial property plans
Government intervention in the market raises important questions on the future of this area
The announcement of a further round of cooling measures by the government last Friday was not entirely unexpected - at least in regard to the residential market, as sources had warned about a developing property bubble while showing willingness to act to curb market excesses.
However, including commercial property is a departure from previous policy which focused entirely on the residential sector.
Ironically, the moves to cool commercial demand are in part a result of previous government measures which shifted demand from residential to commercial property.
In a report following measures in October last year, CBRE highlighted that "while the aim of the latest measures is to curb speculative activity in the residential market, some investors may now turn their attention to commercial property. As such, we expect to see a rise in investor demand for strata-titled offices and industrial units given their relatively digestible lot sizes for private investors and ease of management".
This undoubtedly came to pass.
The report also noted that "the consequences and outcomes of policy initiatives are not always predictable and can often bring about some unintended side-effects. We may see the introduction of further measures going forward and the market should therefore prepare for further uncertainty."