3
The Economy
The commercial and industrial property markets were generally active during most of 2018, though some cooling off was observed towards the end of the year. Prices and rentals of the different market segments recorded further gains during 2018 as a whole. The total number of sale and purchase agreements for non-residential property edged down 1 per cent to 21,900, while total consideration increased 7 per cent to $182.1 billion.
Sale prices and rentals of retail shop space increased 3 per cent and 1 per cent respectively between December 2017 and December 2018. For office space, prices on average rose by a notable 10 per cent. Prices of grade A and B office space rose 24 per cent and 5 per cent respectively, while prices of grade C office space stayed virtually unchanged. Meanwhile, office rentals increased 4 per cent on average, rising 4 per cent, 4 per cent and 3 per cent respectively for grade A, B and C office space (chart 12). Prices and rentals of flatted factory space rose 10 per cent and 4 per cent respectively.
Chart 12
Prices and Rentals of Retail Shop Space and Office Space
(Jan 2014-100)
Retail shop space
Index
120
115
Price index
110
105
100
95
Office space
Index
150
145
140
135
130
Price index
LZ
Rental index
125
120
115
110
105
Jan Jul Jan Jul Jan Jul Jan Jul Jan Jul
| 2014 | 2015 | 2016 | 2017 | 2018 |
100
Rental
index
חחזזוּ
Jan Jul Jan Jul Jan Jul Jan Jul Jan Jul
| 2014 | 2015 | 2016 | 2017 | 2018 |
Prices and rentals of retail shop space and office space recorded further gains during 2018.
As to demand-supply balance, the vacancy rate of retail shop space went up from 9 per cent at end-2017 to 9.4 per cent at end-2018, and that of flatted factory space from 6.1 per cent to 6.3 per cent. Office space had a vacancy rate of 8.6 per cent, down from 9.5 per cent. The respective long-term averages over 1998-2017 were 8.8 per cent, 7.5 per cent and 9.7 per cent.
Price Movements
Consumer price inflation went up in 2018 as the local economy recorded another year of above-trend growth. Netting out the effects of the government's one-off relief measures, underlying consumer price inflation rose from 1.7 per cent in 2017 to 2.6 per cent in 2018, remaining at a moderate level. Headline consumer price inflation likewise picked up from 1.5 per cent to 2.4 per cent. The lower headline inflation rate as compared with the underlying
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