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Uncertainty hits Hong Kong real estate markets

Uncertainty hits Hong Kong real estate markets

The previously high-performing Hong Kong real estate market stalled at the weekend, as the region’s shares took a tumble.

Summary:

  • Investors are becoming increasingly hesitant about the Hong Kong property market
  • As share values fell across the region, property transaction volumes, especially in the luxury market, fell this weekend
  • Investors have previously been wary of the market peaking and many have already refocused their attention to other global real estate markets

Real estate investment in Hong Kong seems to be on hold.

Home sales in the Special Administrative Region’s primary and secondary markets dropped this weekend, as investors weighed up the long-term viability of a market that has been one of the world’s highest performing.

With large stock market fluctuations occurring on the Chinese mainland and a current slump in A shares, investors are hesitant.

The South China Morning Post reports sales of first-hand flats have been estimated to plunge 50% due to the negative economic news and a sparsity of new launches from developers.

Similarly, the secondary market saw just 12 transactions, down from 17 in the previous weekend.

The Hong Kong property market had been one of the highest performing real estate investments in the world, backed by a bullish stock market and associated wealth effect. If the region’s equities continue to stumble, agents expect property sales, particularly in luxury sector, would continue to slide.

Previously, overall transaction levels were rising. According to the Land Registry, a total of 7,993 residential, commercial and industrial units were sold in June, which represented a 16.9% month-on-month increase.

However, investors need to be aware of the ongoing trends that lie under the surface of the headline figures. Second-hand flat transactions are the driving force behind the market, with transaction levels rising 27.3% month on month to 4,443 units, while first-hand unit sales actually fell 15.1% month on month to 1,537.

Consequently, it appears many investors are looking for more stable property investment markets such as the UK.

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