星期日 , 26 9 月 2021
首頁 / English / HK News / Hong Kong’s property market hit hard, both commercial and residential

Hong Kong’s property market hit hard, both commercial and residential

(Photo by REUTERS/Bobby Yip)

Hong Kong’s retail sector has been hit hard, first by months of protests, and then the pandemic. The city’s economy suffered its worst contraction on record in the first quarter of 2020, slumping by 8.9 per cent year on year. Long-term property investors anticipate a further decline in the city’s commercial property sector.

Near the Sogo department store in Causeway Bay, an entire block has been listed for sale. The six storey building on Hennessy Road, on the market for HK$1 billion (US$130 million), is currently occupied by Swiss luxury watchmaker Breitling and Hong Kong jeweller Tse Sui Luen, with a gross floor area of 10,000 sq ft. It is the first whole building on Hennessy Road to be offered for sale since 2009. In March, another entire floor in the Shun Pont Commercial Building, Wan Chai was put on the market for HK$35 million.

“Retail investment has been paused, not only because of the current situation, but also because the retail market might be about to undergo another structural shift after enjoying years of success supported by mainland Chinese spending,” said Simon Smith, a senior director at Savills.

More stores could shut later in the year. According to the Hong Kong Retail Management Association, about 10,400 retail sector workers are expected to lose their jobs and at least 5,200 stores are expected to shut by the end of May.

Even for the residential property market, it is not optimistic. JPMorgan Chase is keeping to a 10 per cent drop in home prices, with a dose caution on the risks of a second wave of US-China trade war and social unrest.

“We had hoped for residential prices to bottom in March 2020 and go up by 10 per cent thereafter,” said Praveen Choudhary, a managing director who tracks Asian gaming and Hong Kong property and conglomerates at Morgan Stanley. “Since then, the COVID-19 outbreak has resulted in significantly lower GDP and the unemployment rate has gone up to 4.2 per cent, a 10-year high. These are generally negative for residential prices.”

Even in this world’s least affordable housing market, home prices have retreated by 5.4 per cent on average from the peak in May last year, with some consultants predicting as much as 20 per cent slide.

But Citigroup analysts said prices are likely to rise between 5 and 10 per cent from this month up to the end of the year as the viral outbreak comes under control and economic activity picks up momentum.

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