Economy: Hong Kong’s economy will gradually recover from a low base in 2021, supported by a solid rebound in China. While the prolonged pandemic, absence of cross-border visitors and geopolitical risks will all continue to create strong headwinds, the expected launch of a local vaccination programme in February should instill greater confidence in the outlook.
Office: Corporate cost-saving coupled with high vacancy will prevent a rental recovery in 2021. The narrowing rental gap between core and non-core submarkets is set to reduce occupiers’ rationale to decentralise. Corporates will need to closely monitor space utilisation over the course of the year as they plan long-term office strategies ahead of the 2022/2023 supply boom.
Retail: Low consumption demand will continue to weigh on the retail property market in 2021. Any recovery rests upon the eradiation of the local pandemic and the resumption of cross-border travel. The rental decline for high street shops in core shopping districts is forecasted to mild compared to that witnessed in 2020.
Logistics: Any recovery in global trade demand will likely be milder than that witnessed after previous troughs. Rapid growth in online shopping will spur stronger logistics demand from e-commerce operators. A recovery in demand coupled with relatively low vacancy will ensure warehouse rents stabilise in 2021. Growing demand from tech and telecom firms will continue to trigger requirements for data centres.
Capital Markets: A gradual economic recovery, reduced transaction costs and banks’ greater willingness to lend will support a slight increase in transaction volume in 2021. Investors are expected to target assets such as data centres, cold storage, commercial podiums and other property types catering to fast-growing business sectors. CBRE expects office and industrial capital values to reach the trough in H1 2021.