Hong Kong's commercial and industrial property markets soared over the past year, with both the transaction volume and value reaching their highest level since 1997, thanks to the influx of hot money as well as stronger demand from investors after the government imposed punitive special stamp duties on residential property transactions, according to data compiled by real estate agency Midland.

Lights illuminate the Central district where many commercial buildings are located.[Photo/Agencies]

As of Dec 8, 2012, the Land Registry received 8,399 registrations of sale and purchase agreements for commercial and industrial properties, up 23.5 percent over the 6,799 registered for the year 2011.

Sales values, at the same time, surged 49.3 percent to HK$42.88 billion during the period from HK$28.73 recorded last year, the unit of Midland that specialized in commercial and industrial transactions in the city said on Wednesday.

Since the government introduced upgraded stamp duties to rein in short-term residential home resales and to block out investors from outside the city, large capital has noticeably moved into the non-residential market, boosting the number of commercial and industrial property transactions in Hong Kong, said Daniel Wong, chief executive officer of Midland IC&I Ltd.

On the other hand, the ample hot money supplies to the market after the US imposed the third round of Quantitative Easing has substantially flowed into the physical assets in the city and beefed up the attractiveness of commercial and industrial buildings, according to Wong, who added that the investment sentiment in the market is strong these days.

The Hong Kong government in late October levied a 5-percent rise in punitive SSD — ranging from 10 to 20 percent on short term home resales within a three-year period, and an additional unprecedented 15 percent Buyer's Stamp Duty (BSD) on home purchases by companies and non-Hong Kong permanent residents.

Midland data showed that number of confirmor sales — deals in which properties are resold before the original transaction is completed — has surged 89.3 percent in the following month after the government introduced the latest SSD and BSD in comparison with the previous month. Sales values even surged 140.4 percent during the period, according to Midland.

The increased speculative activities in the non-residential sector have been also demonstrated by the over 70 percent transactions involving commercial and industrial property below HK$5 million value, since the lower threshold bears less investment risks and small commercial and industrial properties are also easy for resale, according to the property agency.

Besides property transactions, rental of the commercial and industrial buildings in Hong Kong are also climbing at a fast pace. A rental index monitor the sector by Midland has surged to a reading of 122 in November of 2012, rising cumulatively by 19.4 percent this year, according to Midland, which expected that sales prices and rental of commercial and industry buildings in Hong Kong to climb another 20 percent and 15 percent in 2013, respectively.