The residential property market in Hong Kong is likely to stabilize but overall China’s property market faces a further downturn
Henry Cheng, managing director of real estate developer New World Developmen said, ‘In the short-term, the uncertainty of the global economic situation may induce further downside risks to the China property market.
‘However, strong affordability, low interest rates and tight supply in the pipeline should benefit the Hong Kong property market.’
Cheng said the Hong Kong residential market had shown signs of stabilization in recent months after prices of newly launched projects fell and mortgage availability improved.
PropertyWire reported that the sentiment is echoed by Shimao Property Holdings which has just completed China’s most expensive sale. But despite the sale of a Shanghai villa for $30 million, the developer is not optimistic about the future outlook.
Lawrence Hui Wai-man, chief financial officer for Shimao Holdings: ‘The record-breaking deal does not represent a recovery in the market. It just so happened there was a wealthy buyer who liked the property.’
Gross rental income in Hong Kong rose 7.2%. ‘Following the rapid slides of the international financial markets in fourth quarter of 2008, the market expects pressure on the rental rates in both the office and shopping malls due to the lower demand of office space and lower retail consumption,’ Cheng said.
Hong Kong could also benefit from opportunistic buyers looking to benefit on the upswing, according to James Gonzalez, a market analyst with Obelisk Investment Property.
‘The current Hong Kong property market very much resembles the situation at the moment in the UK, Spain and parts of the US. Falling prices and low interest rates makes it a very attractive market for the investor, particularly those with ready funds,’ he said.
Gonzalez added that due to the limited amount of living space in the region, there would always be demand for accommodation.