3
The Economy
The commercial and industrial property markets weakened further during 2020 amid the deep economic recession and exceptionally uncertain economic outlook. Prices for major market segments exhibited diverse movements, while rentals declined. Trading activities fell to multi-year lows, but showed some rebound in the latter part of the year following the Hong Kong Monetary Authority's adjustment of the macro-prudential measures for mortgage loans on non-residential properties in August and the government's abolition of the Doubled ad valorem Stamp Duty on non-residential property transactions in late November. For 2020 as a whole, the number of sale and purchase agreements for non-residential property dropped 10 per cent to 13,400, while total consideration plunged 44 per cent to $80.2 billion.
Amid the retail trade's austere business environment, sale prices of retail shop space only went up 2 per cent between December 2019 and December 2020, while rentals declined 6 per cent. Prices in December 2020 retreated 13 per cent from the peak in 2018 and rentals were 10 per cent below the peak in 2019. For office space, prices on average dropped 2 per cent between December 2019 and December 2020. Prices of grade A and B office space declined 11 per cent and 4 per cent respectively, while prices of grade C office space edged up 1 per cent. Office rentals on average fell 9 per cent, with rentals of grade A, B and C office space retreating 10 per cent, 8 per cent and 4 per cent respectively. Compared with the respective peaks in 2018 and 2019, office prices and rentals on average in December 2020 have plummeted 16 per cent and 12 per cent respectively (chart 12). Prices and rentals of flatted factory space decreased 2 per cent and 1 per cent respectively between December 2019 and December 2020. Compared with their peaks in 2019, prices and rentals of flatted factory space in December 2020 were 12 per cent and 5 per cent lower respectively.
Chart 12
Prices and Rentals of Retail Shop Space and Office Space
120
(Jan 2016-100)
Retail shop space
Index
Office space
Index
145
115
Price index
135
110
105
A
125
Price index
1 15
Rental
100
index
105
Rental index
95
90
90
85
95
85 m
Jan Jul Jan Jul Jan Jul Jan Jul Jan Jul
| 2016 | 2017 | 2018 | 2019 | 2020 |
Jan Jul Jan Jul Jan Jul Jan Jul Jan Jul
| 2019 | 2020 |
| 2016 | 2017 | 2018
Prices of retail shop space and office space exhibited diverse movements during 2020, while rentals declined.
47