3
The Economy
and to reduce the possible risks to financial stability arising from an exuberant property market. These measures have yielded notable results.
Likewise, the commercial and industrial property markets became more sluggish in the second half of 2019 amid the subdued economic conditions. For the year as a whole, prices in the different market segments declined markedly, while rentals exhibited diverse movements. The number of sale and purchase agreements for non-residential property plunged 32 per cent to 15,000, while total consideration dropped 21 per cent to $143.6 billion.
Sale prices and rentals of retail shop space fell 14 per cent and 3 per cent respectively between December 2018 and December 2019, reflecting the correction in the second half of the year amid the sharp deterioration in the retail trade. For office space, prices on average decreased 9 per cent. Prices of grade A, B and C office space dropped 14 per cent, 1 per cent and 4 per cent respectively. Office rentals on average were little changed, with rentals of grade A and B office space both rising 1 per cent, and grade C office space retreating 2 per cent (chart 12). Prices of flatted factory space declined 7 per cent, while rentals were little changed.
Chart 12
Prices and Rentals of Retail Shop Space and Office Space
Retail shop space
Index
120
(Jan 2015=100)
Office space
Index
150
115
140
Price index
110
130
105
120
Rental
110
100
index
95
55
100
Price index
Rental index
90
90
Jan Jul Jan Jul Jan Jul Jan Jul Jan Jul
| 2015 | 2016 | 2017 | 2018 | 2019 |
Jan Jul Jan Jul Jan Jul Jan Jul Jan Jul
❘ 2015 | 2016 | 2017 | 2018
2019 |
Prices of retail shop space and office space declined markedly during 2019, while rentals exhibited diverse movements.
As to demand-supply balance, the vacancy rate of retail shop space rose from 9.4 per cent at end-2018 to 10.1 per cent at end-2019, and that of office space from 8.6 per cent to 9 per cent. The vacancy rate of flatted factory space went down from 6.3 per cent to 5.9 per cent. The respective long-term averages for these three types of commercial property over 1999-2018 were 8.8 per cent, 9.3 per cent and 7.3 per cent.
Price Movements
Overall price pressures remained largely moderate in 2019. Even so, consumer price inflation went up during the year, primarily due to the sharp increase in pork prices amid the reduced
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