The anti-extradition bill protests in the past few weeks have dampened sentiment in Hong Kong’s property market, with lower residential housing turnover in the short term as buyers and investors adopt a wait-and-see attitude, according to real estate experts.
The second quarter of this year saw residential housing transactions surge 49 per cent, the highest on a quarterly basis since the third quarter of 2012, according to valuation and advisory services firm Colliers.
But, the purchasing momentum will slow down in the second half amid tightening refinancing and reduced cash rebates of banks, it added.
Colliers senior director Daniel Shih said there have been oversubscriptions in recent first-hand property sales as buyers considered the potential risk of future price increases.
Prices in the mass residential market had risen 10.4 per cent in the first five months of this year, but, in the second half, the increases would narrow to six per cent, Shih said.
In the luxury residential sector, prices have gone up slightly with solid purchasing demand as buyers expect a more stable interest-rate outlook for the rest of the year.
Shih said the possibility of lower interest rates and higher liquidity would provide more support to the property market.
Besides, as some developers launch urban renewal plans to meet market demand instead of relying on the government to sell land, the transaction volume will partly depend on the launch of new housing projects, Shih added.
For the leasing market, due to the decentralisation trend and the addition of new quality office buildings, especially in Kowloon East, average rents in Kowloon have climbed, while rents for Grade A offices, especially those in Central and Admiralty, are expected to drop 3.8 per cent, according to Colliers.
Rents for commercial buildings in Hong Kong are expected to drop by 1.3 per cent by the end of the year, while the overall vacancy rate of Grade A offices had risen by one per cent in the past six months.
The investment volume of commercial properties showed strong rebound in the first half – up 44 per cent year-on-year to HK$97.6 billion (US$12.47 billion). Supported by the anticipation of a more stable interest-rate environment in Hong Kong, Colliers expects the investment market to see cautious optimism.
Investors could consider districts with a more bullish rental outlook, such as Hong Kong Island East, and those with strong market fundamentals, like neighbourhood malls, said Thomas Chak, executive director of capital markets and investment services at Colliers.
He said neighbourhood malls will outperform among other property investments this year.
Generally, Colliers expects to see lower interest rates, low unemployment, and opportunities arising from the Guangdong-Hong Kong-Macao Greater Bay Area development to provide long-term stability. CHINA DAILY