Abstract
Hong Kong’s real estate sector is struggling in 2009, with the
region’s worst performing house prices and
a looming crisis in
office accommodation.
The central Chinese and the Hong Kong Special
Administrative Region (HKSA) governments have
implemented several
strategies to help minimise the impact over the medium to long term.
Commercial
banks have also relaxed their lending requirements for property
and have lowered mortgage rates.
Despite these activities, and limited
land resources, demands is still falling. The office market is
characterised by companies downsizing or moving from central business
districts to save money.
In the residential market, prices of luxury
residential properties fell and sales increased. Yet, with prices
now
meeting market demand, luxury residential properties may be one sector that
may be showing signs
of a recovery.
Prices fell further in other areas
of the residential market in Q209, especially small apartments.
The retail
sector appears to be in better shape. In first quarter of 2009, there were
more retail transactions
than in the office or industrial sectors, and
prices for prime retail property remained relatively static.
Over the
medium to long term, the Hong Kong property market should recover due to
adequately
capitalised banks offering relatively easy access to finance
for property. However, in the short term there
is still pain to be
endured.
Housing prices are unlikely to continue to fall much further
after a nearly 16% drop in the past twelve
months. However, any recovery
is likely to be slow. The residential sector, especially at the luxury end,
is
expected to recover before other sectors.
Office rentals are likely
to continue falling, given that they were still one of the most expensive
worldwide
to the end of 2008.
The retail sector should continue to
escape the worst of the crisis.
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