Will Hong Kong avoid Singapore property’s plight?

Will Hong Kong avoid Singapore property’s plight?

With the Hong Kong property market facing similar problems to those encountered in Singapore, Southeast Asian investors are seeking assets elsewhere.

Summary:

  • After years of sustained growth, Hong Kong property is the most expensive in the world
  • Following the slow decline of values in Singapore, analysts are keen to know what the medium-term future in Hong Kong holds
  • Investors have already turned their attention to more stable high-performing markets such as the UK

Will the Hong Kong property market follow the same trajectory as that seen in Singapore? Will the decline be more dramatic?

Both markets have recorded the strongest performance in Southeast Asia for many years, but both capital growth and yield revenue are starting to dry up. In Singapore, sales have dropped and house prices are down 8% following government-sanctioned measures such as higher stamp duties and tougher mortgage conditions.

However, developer Wing Tai Properties does not necessarily expect the same to happen in Hong Kong, despite the Special Administrative Region’s introduction of similar cooling measures.

Edmund Cheng, Deputy Chairman of the Singaporean developer, said: “The two cities are so similar, but even then – every place is different.” He added Singapore’s public housing situation creates a different supply and demand dynamic compared to Hong Kong.

Although property values are still up 6.6% from the beginning of the year, October saw Hong Kong‘s property sales hit a 19-month low, with sales down 43.63% year on year, following September’s 31.6% decrease.

As demand for property slows, prices could start to fall. Last month it was predicted that an imminent Federal Reserve interest rate rise would expedite the decline, with experts forecasting a dramatic crash of property values.

Many investors in Southeast Asia are now taking an interest in UK property investments. The market is performing well with yields at record highs and annual capital growth on target to fall just short of 10%.

Find out why international demand for UK property investments has never been higher in our latest ebook:
"Investing in UK Real Estate"

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