A growing economy that is luring an increasing number of visitors from China bodes well for Hong Kong’s residential and office markets, according to a new report from Jones Lang LaSalle. The firm projects that residential property values in Hong Kong will increase by nearly 10% this year.

One reason for the increase is the postponement of a major housing development by Hong Kong’s railway corporation. Still, roughly 28,000 new residential units are expected to be built this year.

Hong Kong’s office vacancy rate in mid-2003 registered 14.9%. Jones Lang LaSalle predicts the rate will fall to 10% this year. A reduction office supply coming online is considered a major factor for the projected improvement. In fact, the real estate services firm predicts that office rents will rise by 20% to 25% in 2005.