ENG-2002 — Page 95

THE ECONOMY

average a decline of 1 per cent. Yet against their respective peak levels in the third quarter of 1997, prices and rentals of shopping space both tumbled, by an average of 57 per cent and 26 per cent in the fourth quarter of 2002.

The rental market for industrial property was inactive in 2002. Demand for conventional factory space was restrained by a further contraction in local manufacturing activity. Demand for modern industrial premises for use as data centres and back-up service centres was also on the wane, amidst further consolidation in the information technology sector. On a quarter-to-quarter comparison, rentals of industrial space drifted lower in the first three quarters of 2002, on average by 2 per cent, 3 per cent and 2 per cent respectively, before edging up by 1 per cent in the fourth quarter. For the year as a whole, rentals of industrial space on average fell by 7 per cent. The sales market for industrial property was at a standstill in 2002, with a lack of buying interest. On a quarter-to-quarter comparison, prices of industrial space on average fell by 3 per cent each in the first, third and fourth quarters of 2002, more than offsetting the 2 per cent rise in the second quarter. For the year as a whole, there was on average a decrease of 7 per cent. Against their respective peak levels in 1994, prices and rentals of industrial space both slumped, by an average of 68 per cent and 46 per cent in the fourth quarter of 2002.

Chart 19

Sale and purchase agreements by broad type of property

Number ('000)

80

10

70

60

59

50

40

30

20

10

0

Residential property Non-residential property

QI Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 QI Q2 Q3 Q4 Q1 Q2 Q3 Q4

1997

1998

1999

2000

2001

2002

Transactions in residential property showed a modest increase in 2002, but this was offset by a visible decline in transactions in non-residential property.

On supply of new property, completions of private residential property rose sharply by 30 per cent in 2002, well beyond the 2 per cent increase in 2001. Completions of office space recorded an even larger rise, by 117 per cent in 2002, representing a sharp turnaround from the 20 per cent decrease in 2001. On the other hand, completions of shopping space showed only a moderate increase, by 5 per cent in 2002, after surging by 105 per cent in 2001. As to industrial property, completions were reduced further by 35 per cent in 2002, following a fall of 28 per cent in 2001.

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