ENG-2010 — Page 103

The Economy 61

construction has yet to commence) picked up from 53 000 units as estimated at end-2009 to 59 000 units as estimated at end-2010.

Underpinned by the sustained economic recovery, the non-residential property market also firmed up further. For office space, overall sale prices in the fourth quarter of 2010 soared by 24 per cent over a year earlier, with Grade A, B and C office space recording respective gains of 24 per cent, 24 per cent and 25 per cent. Office rentals also rose, albeit by a less rapid 13 per cent. The rise in rentals of Grade A, B and C office space was broadly similar, at 13 per cent, 13 per cent and 14 per cent respectively. Following the rally since 2009, overall office prices have already exceeded their 2008 peak by a wide margin, but rentals were still slightly. lower (Chart 15).

Chart 15

Prices and Rentals of Office Space

(1999=100)

Index

260

240

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200

180

160

140

120

100

80

60

40

20

0

Price index

Rental index

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

2006 1 2007

2008

I 2009

2010

Prices of office space continued to rise at a faster pace than rentals in 2010.

On the back of the robust retail sector, sale prices of retail shop space in the fourth quarter of 2010 soared by 28 per cent over a year earlier, while rentals rose by a less rampant but still substantial 10 per cent. Both prices and rentals of retail shop space have fully recouped the losses suffered during the global financial crisis. Meanwhile, prices and rentals for flatted factory space rose by 30 per cent and 10 per cent respectively. Compared with the 2008 peaks, prices of flatted factory space were already much higher, while rentals were roughly on par.

The vacancy rate for residential property rebounded from a low level of 4.3 per cent at end-2009 to 4.7 per cent at end-2010. Over the same period, vacancy rates for non-residential property fell across the board, from 10.3 per cent to 8 per cent for office space, from 8.7 per cent to 7.9 per cent for commercial space, and from 8 per cent to 6.7 per cent for flatted factory space.