Last year's overall sales volume of residential properties rose 41% from 2003, with prices rising 29% in the last quarter, the Rating & Valuation Department says. Office prices grew 61%, with Grade A accommodation netting an even higher rise of 73%, while rents rose 12%.

In its latest Hong Kong Property Review, the department noted the residential sector was dominated by strong sales in the secondary market and sharp price rises in the luxury segment last year.

The 41% growth in the overall volume was mainly attributable to the growth in secondary sales, which went up 66%. Prices also escalated. Large flats saw an increase of 41%, relative to the 28% rise for small and medium flats. Rents went up 11%, and market yields edged downwards during the year.

A total of 26,040 residential units were completed last year. Take-up at 31,400 units was substantially higher than 2003 and a record high since 1988.

Vacancy fell to 64,250 units, representing 6.2% of stock. It is estimated about 21,200 units and 17,400 units will be completed in 2005 and 2006.

Office prices surged 61%, rent up 12%

A robust office market prevailed last year, and the large supply produced in 2003 was gradually taken up. The overall yearly price gain was 61%. Rents experienced a more gradual and modest growth, rising just 12%. The market yield continued to fall.

On the supply side, a total of 279,500 square metres of office space was completed last year, 6% below the level of 2003. Take-up improved significantly, with 373,400 square metres recorded. The overall vacancy rate dropped to 12.7%.

Completions are expected to fall sharply, to 61,700 square metres in 2005 and 105,300 square metres in 2006.

For commercial premises, last year saw the completion of 91,300 square metres, 23% less than 2003. Take-up amounted to 66,100 square metres, and vacancy stayed at a similar level, of 10.8%. Completions in 2005 and 2006 may go up to 109,200 square metres and 131,000 square metres.

Retail premises prices jump 40%

The strong economic recovery and the surge in tourist arrivals led to a 40% jump retail premises prices during the year, although rents moved up 9% only, leading to a lower market yield.

The industrial market also recorded a higher volume of sales and rising prices. Factory prices gained 31% last year, while rents rose just 7%. Market yield continued to fall.

The year saw the completion of only 800 square metres of factory space. However, take-up turned positive, at 329,100 square metres, and vacancy fell considerably to 8.7%. Minimal supply is expected, with 1,200 square metres in 2005 and none in 2006.

The take-up of industrial/office space turned positive, at 23,300 square metres, leading to lower vacancy of 11.1%. Only 4,100 square metres are likely to be in place in 2005, and probably none in 2006.

No storage space was produced last year, but completions are expected to come, with 16,900 square metres in 2005 and 13,000 square metres in 2006. There was noticeable improvement in the vacancy level last year, which fell to 4.7%.

The Hong Kong Property Review presents information on completions, take-up, vacancy, prices and rents. The full report is now available at the Rating & Valuation Department's website. Printed copies will be available for sale around mid-May.