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Rabu, 11 Desember 2019 15:43:00

Hit by Double Woes, Hong Kong Property Market Heads for an Uncertain 2020

Home prices saw the steepest increase ever in early 2019 before the gains were trimmed by weakened sentiment and falling sales in the second half of the year
Office rents peaked in Q1 and have since fallen over the course of 2019
The retail sector was hardest hit by the social unrest which stifled any hope of a rebound in retail rents for core submarkets
The volume of major property transactions shrank to a 10-year low alongside the decline in commercial real estate rents
The leasing and investment outlook across all sectors in 2020 is set to remain subdued as US-China trade tensions and local social unrest continue to weigh on sentiment.
 
HONG KONG, - 10 December 2019 - The Hong Kong property market has borne witness to the city's turmoil in 2019. Home prices experienced their steepest increase in the first half of 2019 but have seen those gains trimmed in recent months in the face of the growing social unrest.

The ongoing trade tensions and social unrest have weighed on business sentiment and caused visitor arrivals to plummet, resulting in falling retail sales, and weak leasing demand. As a result, commercial real estate rentals have fallen, which has in turn affected the performance and outlook of the property investment market, with transaction volumes in 2019 falling to a decade low, as noted by Cushman & Wakefield, a leading global real estate services firm.
 
Residential: Sentiments chilled after robust H1
The residential market began 2019 on a positive note with home sales volume rebounding in Q1, growing by 55% quarter-on-quarter, amid a truce between China and the U.S. on trade talks and the expectation of rate cuts.

The upbeat momentum extended into Q2 when residential S&Ps peaked at 8,208 in May, the highest level in six and a half years. However, the unfolding of the social unrest since late Q2 chilled the market sentiment.

Home sales began to fall in Q3, reaching as low as 3,447 residential S&Ps in September. The relaxation of LTV ratios, effective from mid-October, provided the market with a temporary boost, driving total home sales up to 9,757 S&Ps in Q4 through the end of November. Based on an estimate of 4,000 residential S&Ps for December, the total home sales in Q4 would amount to 13,757, up 12% from Q3. Although that would amount to a drop in home sales in H2 2019 of 24% from H1, total sales volume for the year would still be up for 2019, by 5.9% year-on-year.
 
Mr Alva To, Cushman & Wakefield's Vice President, Greater China & Head of Consulting, Greater China commented, "The escalation of China-U.S. trade tensions and the expectation of rate hikes in 2018 resulted in huge uncertainties that discouraged home sales.

However, as the market became accustomed to the uneven progress of the trade talks, and with three rounds of rate cuts instead of rate hikes, home sales volume rebounded this year based on strong pent-up demand, despite the impact of the social unrest in H2. Economic factors still weigh more heavily on buyers' decision making." (*).