Frank Knight expects the uptrend of rents and prices of commercial properties in first-tier Chinese cities will continue in 2012. The rents and prices of Grade-A offices are expected to grow 15% and 10% respectively in Shanghai, followed by Guangzhou and Beijing in 2012.
In the residential market, the Chinese government is unlikely to launch further tightening policies, says the report. Prices will only adjust slightly this year. Although the transaction volumes of luxury flats will decline significantly, rents and prices in Shanghai and Beijing will increase slightly, while those in Guangzhou will remain stable.
Thomas Lam Ho Man, Head of Research at Knight Frank in Greater China, says “in Hong Kong, we forecast that the current downtrend in Central Grade-A office rents will continue in 2012. In the residential market, mass home prices are likely to drop 10–15% in 2012. However, with continued tight supply, luxury residential properties are likely to perform better, with price declines limited to 10% in 2012. Retail properties will continue to outperform other property markets in 2012 and retail rents are expected to continue their uptrend in 2012, albeit at a slower pace amid the risks of a worsening global economy.”