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Kenneth Ko

ESTATE agents predict a modest recovery in the residential property market in 1996, with prices rising by up to 10 per cent.

Some agents said commercial property prices had bottomed out after taking a nose-dive for much of this year.

Richard Ellis executive director Chris Thrift said commercial prices had dropped to a level where tenants could consider buying.

Overall though, estate agents did not expect a re-run of the frenzied activity of 1994 which preceded the introduction of anti-speculation measures.

 Midland chairman Freddie Wong Kin-yip said residential prices fell 10 per cent this year, or an accumulated 26 per cent, from peak levels of March, 1994.

He said total property transactions for 1995 would shrink to a five-year low of about 95,000, compared with 114,000 for 1994.

Market activity was expected to increase next year, with the volume of transactions hitting 110,000 as accumulated buying demand gradually returned to the marketplace, he said.

Affordable home prices, relaxed mortgage lending policies and interest rates that had peaked would support a recovery despite the impact of low economic growth and high unemployment, he said.

Midland residential department director Jan McNally said there was a surplus of cash around but still a question mark over whether or not people would commit to a new purchase.

Mr Wong said the actual supply of new flats would be 19,734 units this year, a shortfall of 6,430 units to the Government's forecast.

The luxury residential sector could stage a stronger recovery due to tight supply and demand for serviced apartments would remain solid next year, he said.

 The office sector was expected to see a mixed performance in 1996.

 Midland deputy chairman and managing director William Fung Yui-sum predicted grade A office prices to pick up about 5 per cent.

 Office rents on Hong Kong Island would fall 5 to 10 per cent due to the large supply of new premises, he said.

 Prospects for office rents in Kowloon looked better in view of decreasing vacancy rates, with grade A premises tipped to see a 5 per cent rise in rental values, he said.

 According to Richard Ellis, there would continue to be strong demand for office space in Hong Kong as many multinationals eager to get a foothold in China were arriving in town.

 Mr Thriftm said there was a feeling that office rents would continue to slide in the immediate future.

 He said rents could be firm later in 1996 as it became more apparent that some large commercial projects had been delayed or shelved because of the soft leasing market.

 While rents might fall, Mr Fung said the worst was over for the retail property market and investors would return, especially in popular areas such as Tsim Sha Tsui, Mongkok and Causeway Bay.

  Retail property prices would rise 5 to 10 per cent in 1996 while rental rates might jump 3 to 10 per cent in various districts, he said.

 While industrial property prices and rents had fallen 30 to 35 per cent since the peak levels of 1994, Mr Fung projected a steady market for 1996.



Home prices tipped to recover