Boston, MA -- (SBWIRE) -- 06/27/2013 -- The Hong Kong Real Estate report examines the commercial office, retail, industrial and construction segments throughout the country in the context of a cooling market. The report covers rental market performance in terms of rates and yields over the past 24 months and examines how best to maximise returns in the commercial real estate market, while minimising investment risk and exploring the impact of the necessary contraction in the property market.

According to our most recent round of in-country interviews which were conducted in December 2012, rents in Hong Kong reported a robust second half of 2012 in all commercial sub-sectors, in spite of the continued signs of economic weakness which we believe will come to bear on the market over 2013. Also, we are seeing strong signs of a marked slowdown in the retail sector which, coupled with corrective pressure in the property market, means that consumption momentum should slow further.

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Key Points

- Construction activity in Hong Kong remains robust as the government's plan to boost housing supply and to improve the city's transport links moves into full swing. We expect the construction sector to continue to grow relatively robustly and have revised up our 2012 construction real growth estimate to 10.1%. For 2013, we are cautiously optimistic towards the sector as the large pipeline of projects and the launch of another round of quantitative easing in the US should provide a solid base to support construction activity.
- We believe that the Qianhai-Hong Kong special economic zone will help to bolster Hong Kong's financial sector going forward, and that the sector will continue to be one of the city's main engines of growth. Additionally, the city's banks will see increased opportunities in the offshore yuan services sector which will in turn help to cement its role as the leading global offshore yuan trading centre. In the near term, our expectations for subdued economic activity towards H213, as well as a property market correction, are likely to weigh on the city's growth prospects this year.
- Hong Kong has kickstarted 2013 with a new round of liberalisation in its cross-border relationship with China. January 1 saw the ninth supplement of the Closer Economic Partnership Agreement (CEPA), essentially a free trade agreement, come into force. A total of 37 liberalisation measures across 22 service sectors were introduced. The measures seek to broaden Hong Kong's economic structure and carve out further competitive advantages for the city's endeavours to develop six new industries aside from the four traditional pillar industries of financial services, trading and logistics, tourism and producer and professional services.

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