The Property, Construction and Jobs Market in Hong Kong in 2014 & 2015

Introduction
This blog provides a quick overview of the Q3 2014 market in the retail, residential and commercial property sectors. It summarizes key events and movements of the market within Q3 and will offer glimpses of the future trends for the industry outlook in 2015. It will also share its possible effects on the employment market as a result of the changes in business of the industry. It can serve as guidance for both local and overseas candidates when considering seeking work in Hong Kong or evaluating the desirability of changing jobs. 

Summary
Within Q3 2014 we still see a strong demand combined with rising construction costs as the major factors for driving up house prices in Hong Kong. Office occupancy rates have remained high and we see an increase influx of Chinese companies investing into office spaces in Central, Sheung Wan and Admiralty districts in particular, while other local SMEs are looking for alternative locations to lower rental costs, with areas such as the Kowloon East becoming a hot spot for office spaces of late. In relation to property development, the industry has remained active and several major developers have big projects in place down the horizon especially in the New Territories area and we expect to see more exciting residential as well as commercial projects coming up soon. 

All this means that companies will require more qualified professionals to join their teams, particularly in the professional surveyors’ stream, where all the contractors, consultancies and clients are experiencing difficulties in retaining skilled professionals such as quantity surveyors, project managers and property management professionals. 

Retail
With the recent unrest of the Occupy Central Movements retail sales in Hong Kong with some of the major brands have suffered a drop in sales in Q3 2014. The reduced sales are mainly caused by the decrease in number of mainland tourists visiting the city and trends of people shopping at places outside the key shopping districts such as Central, Causeway Bay and Mongkok. 

However, luxury brand operators remain confident in the overall long-term business and believe the drop in sales to be a hiccup. "We are here to reinvigorate the confidence in Hong Kong," Fendi chief executive Pietro Beccari said at the opening of its Landmark flagship store yesterday. (Source: SCMP)

Along with Piertro Beccari, several other heads of international luxury brands have also shared similar opinion and dismissed the idea that the pro- democracy protests have damaged the city’s status as the world-class retail destination.

-Future prospects & developments: Positive prospects with new influx of brands
Luxury retail industries will remain buoyant and with potential new openings of several flagship stores in Q1 2015. Luxury brand operators will target for new ideas in design and renovation to enhance shoppers’ experience. Demand for skilled professionals in facilities, project management, and surveying is deemed to remain high within this sector going forward, with the traditional big names such as LVMH, Gucci, Fendi already have expansions in place along with new influx of other high- end retail outlets such as SMCP. 

Office Rental : Low vacancy rate and the needs to maximize space utilization
In Q3 2014 the property market in Hong Kong is still driven by a high demand with limited supply. Office leases in CBD areas such as Central, Admiralty see rental prices gone up by up to 5% to now almost HKD 95 per square feet.  (Source: Colliers)

We see a new influx of Chinese companies coming into the market, renting office spaces along the Central, Admiralty as well as the Sheung Wan areas, spiking up the occupied rate. While SMEs and other shared services centres are migrating to Kowloon East to lower rental costs.  

While some tenants are reluctant to move out of the CBD areas, the solutions they found are to maximize the efficiencies in terms of cost and space with this being the primary objective in office renovation projects.

Property Developers
Prices of the residential housing market remain one of the hottest topics among Hong Kongers, and there is no strong evidence that this will subside anytime soon. 

-Demand and construction costs are on the up
High prices are both supported by high demand and rise in construction costs. As the construction market is remaining buoyant, with high demand for skilled labour driving up labour costs, as well as the ever rising of construction material costs, housing prices are expected to continue to shoot up at an exponential rate. 

-Shortage of skilled labour
With new housing projects being developed in the urban areas as well as the North East part of New Territories in particular, supply of houses will continue to grow in the next 3-4 years. As a result, demand for construction professionals, across contractors, consultancies and in-house client spaces are expected to remain high. Candidates may opt to join and stay on a project basis.  

Influx of expatriate candidates
While shortage of skilled labour may be a problem in the short term, a lot of multinational corporations (MNCs) are still seeking to attract overseas talent to take on major projects of various scales. We continuously see the formation of cross-cultural teams being the nuts and bolts among the MNCs in the Asia Pacific Region. Some of the Chinese returnees who had previously acquired overseas experience and possess fluent Mandarin ability will be on top of the pile. 

Conclusion
Hong Kong remains an exciting place for construction and property professionals to come and work in, with various major development projects ongoing and further more to come in 2015.

There is a constant high demand for skilled professionals with major projects experience that has been acquired overseas as well as also valuing good quality project experience gained in Hong Kong and China. 

If you are considering relocating or moving jobs, now is a good time to begin this process before the surge in competition starts once Chinese New Year bonuses are awarded.

Tony Chan
Maxim Recruitment
Hong Kong & Asia Region