Global real estate and services consultancy Knight Frank have released the Greater China Q3 2015 Report which looks at the Grade-A office, luxury residential and prime retail property markets in Beijing, Shanghai, Guangzhou, Hong Kong and Taipei.

Luxury Residential: 

In Q3, the mainland residential market picked up gradually amid a series of favourable policies. Luxury home prices gained further in Beijing, Shanghai and Guangzhou, where the markets continued to clear inventories. The favourable policies will continue to benefit the so-called first-tier cities, but are less effective in lower-tier cities, which have high inventory levels, and weak demand.

With Chinese and Hong Kong stock market volatility and concerns over an interest-rate hike in the US, Hong Kong’s luxury homebuyers tended to wait and see, while secondary landlords were also firm on asking prices, resulting in slight declines in home sales, rents and prices in the luxury market.

Taipei has been affected by the cooling measures, the launch of a combined property and land tax and diluted market expectations.

Grade-A Office:

In the third quarter of 2015, Chinese stock market volatility coupled with growing fears of a slowdown in domestic economic growth led to a slower pace of corporate expansion, weighing on Grade-A office rents in major mainland cities.

Meanwhile, Grade-A offices prices in Beijing, Shanghai and Guangzhou rose as investing in prime commercial properties became increasingly attractive in such a low interest-rate environment. However with the completion of more Grade-A office buildings in the cities, rents are expected to face further downward pressure in the future.

In Hong Kong, due to extremely low availability and high rents in core areas, some firms shifted to more cost-effective offices in non-core areas where supply was abundant. This trend is likely to continue next year, with further growth in office rents in core areas. In Taipei, rents are expected to remain stable with potential office demand from foreign enterprises.

Prime retail:

With the growing popularity of online shopping, the growth of overall retail sales did not stimulate the retail property market. During Q3, prime retail rents and prices in Beijing and Shanghai continued to decline, while they remained stable in Guangzhou. Affected by China’s anti-corruption campaign, mainland visitors shifted to mid-end products, resulting in a deteriorating retail sector in Hong Kong. With fewer visitors in prime retail locations, prime retail rents and prices declined in Q3. In the coming year, retail rents in Taipei prime locations are set to remain firm, but those in non-core areas could slightly decrease.