In the face of weakness in the US, Mainland China and Eurozone economies, Hong Kong?s workforce has grown to new record highs. Since the start of 2010, the total number of persons employed has grown, on average, by 0.17% m-o-m; the fastest pace of employment growth for the city on record.
Source: Census and Statistics Department
Note: Methodological changes were made from Jun-1995 to May-1997. For consistency, this period is not included in the analysis
Hong Kong?s median household income has also recorded sound growth, up by 8.2% in 2010 and 8.7% in 2011. This compares to the aggregate growth rate of 8.5% per annum achieved during the first decade of the millennium (2000-2009). What is more astounding, is that this growth has been achieved with the import/export trading and finance sectors being severely affected by the Global Financial Crisis and European Sovereign Debt Crisis; the import/export trading sector is the city?s second-largest employer while the finance sector typically generates about 15% of the city?s GDP.
The strong growth in employment and median household income has been driven by structural changes in the economy. A closer look at the composition of the city?s GDP over the last decade reveals that Hong Kong?s visible trade deficit (goods imports minus exports) has widened to a record high of 27.2% of its output. Meanwhile the city?s invisible trade surplus (services exports minus imports) has surged to 26.0% of its GDP.
Source: Census and Statistics Department
I believe an important catalyst has contributed to this trend. Given the difficulties that Western economies are facing, it is natural for enterprises to redirect their focuses into Asia-Pacific, a region with robust growth. Hong Kong?s geographical position at the heart of Asia and its proximity to China has made the city a focal point of activity in the region.
This has important implications on the demand for commercial property in Hong Kong, both in terms of leasing and investment demand, because every kind of service provision, from selling a handbag to underwriting an Initial Public Offering, cannot take place without commercial property. Demand for commercial properties therefore rises alongside demand for our services.
With growth in Western economies likely to be subdued in the foreseeable future and Asia-Pacific expected to be an important engine of growth for the global economy, Hong Kong should see an increase in the demand for commercial properties over the near-to-longer term.
About the author
William Tsang is the Analyst of Research for Jones Lang LaSalle in Hong Kong.
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