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Hong Kong’s property markets have seen a remarkable period of growth since 2009 driven by an array of positive drivers, both domestic and foreign. Measures put in place to address the parlous state of the world’s major economies post Global Financial Crisis (GFC) resulted in abundant liquidity and extremely low interest rates. Because of the US/HK Dollar peg, interest rates in the territory fell in tandem (and in inflation adjusted terms have been in negative territory for the past ten years), while excess liquidity found its way into local stock and property markets.
Retail sales in Beijing were up 4.4% year-on-year (YoY) to RMB539.8 billion in 1H/2018, although the growth rate continued to slow. Total retail sales of consumer goods reached RMB486.3 billion, of which the F&B industry accounted for RMB53.5 billion. Online retail sales continued to record strong growth, registering a 22% YoY increase to RMB113.7 billion and accounting for 21.1% of total retail sales.
In the "2018 Commercial Appeal Ranking of Chinese Cities" by CBN Weekly, released in April 2018, Chengdu once again won first place among other new first-tier cities. The ranking takes into consideration commercial resources aggregation, accessibility, residents’ vitality, lifestyle diversity, and future flexibility. Chengdu, as one of the most important centres in Western China, has promising opportunities for future commercial development.
According to the Guangzhou Statistics Bureau, Guangzhou’s GDP expanded to RMB1,065.3 billion at the end of 1H/2018, increasing 6.2% year-on-year (YoY). Tertiary industry grew by 6.1% YoY to RMB752.0 billion at the same time, accounting for 70.6% of total GDP. Market inflation was stable in Guangzhou, with the local CPI increasing by 0.1 of a percentage point (ppt) YoY to 102.3 in Q2/2018.
China’s economy slowed to 6.7% in Q2/2018 amid signs that the financial de-risking and the China-US trade war were starting to have an impact on businesses. Domestic consumption has become an increasingly important driver of growth, supported by the government’s efforts to rebalance the economy as well as advancements in online sales platforms and improvements in the physical market.
Located at the southern tip of the Pearl River Delta and bordering Hong Kong, Shenzhen is a relatively new city with only 40 years of history. The city grew from a small farming village to become one of the four tier-one cities in China. Its rapid population growth and economic development are a result of its designation as a Special Economic Zone, established by the central government in the late 1970s, as well as its close proximity to Hong Kong.
Tianjin’s economy has recorded outstanding growth over the past decade, maintaining an average yearly rise of over 10%. However, GDP growth in 2017 was merely 3.6%, down from the 9% growth seen in 2016. Sentiment in the city took a dip after the local government announced a revision to the city’s economic engine - Binhai New Area’s 2016 GDP – from one trillion yuan in GDP to RMB665.5 billion last year. By the end of 1H/2018, Tianjin GDP was at RMB992.7 billion, up 3.4% year-on-year (YoY). The tertiary sector remained the largest contributor (55.3%) with growth of 5.3%, followed by the secondary sector (44.1%), which increased by 1.5%. This also showed the city’s transformation from being a manufacturing-oriented economy to a more service-oriented one.
Macau’s economy is expected to grow at its fastest pace yet, with real GDP in the first half of 2018 increasing by 7.6% year-on-year (YoY). This growth is supported by Macau’s pillar industries of gaming and tourism, with increases in gaming revenue and visitor spending. In the first half of 2018, gross gaming revenue (GGR) reached MOP150.22 billion, increasing by 18.9% quarter-on-quarter (QoQ); it’s the biggest jump since February 2014. January to May 2018 spending by visitors (excluding gaming) reached MOP21.8 billion, up 28% YoY, and from May to July of 2018, the unemployment rate decreased gradually to 1.8%, the lowest jobless rate since 2017. The median income of local residents is now MOP19,000 per month.
As the Japanese economy has grown under Abenomics, large-scale Grade B office1 metrics in the central five wards (C5W)2 have improved. A strong economy, with growing corporate profits and fierce competition for talent, is buffeting rents as tenants chase increasingly scarce office space. Concerns of secondary vacancy as a result of the Grade A supply boom have not yet materialised; even unaccommodated demand appears to be spilling over from Grade A to large-scale Grade B. Against this backdrop, large-scale Grade B offices in particular look well placed as they are simultaneously able to tap into the large tenant pool of small- and medium-sized companies as well as cater to displaced Grade A tenants. As opportunities to acquire Grade A offices are limited, Grade B properties should be increasingly attractive with relatively higher yields.
Located south-east of downtown Seoul, Pangyo is a planned city in Gyeonggi province which the Government developed to alleviate Seoul’s housing shortage and accelerate IT industrial development. To prevent the city from becoming a commuter town and to be self-contained, the central and Gyeonggi provincial government constructed a venture valley called Pangyo Techno Valley I (First Pangyo) at Bundang-gu, Seongnam-si covering a 660,000 sq m land site.