China, Hong Kong & Singapore property 2017 outlook subdued

China, Hong Kong & Singapore property 2017 outlook subdued

New report cites the potential rise of US interest rates, strengthening of the dollar and cooling measures that could slow growth in key Asian markets.

Summary:

  • Some property markets in the Far East have received a mixed outlook for the year ahead
  • Rising US interest rates, dollar strengthening and roll out of new international policies from President Trump could stunt growth in Asian markets
  • Underpinned by key supply and demand fundamentals, UK property could offer investors a safe haven alternative amid current uncertainty

Growth in key Asian property markets could slow in 2017.

That’s the view of a new report published by Colliers International, which has noted that a number of key global uncertainties in the year ahead could hit the returns of property investors in Asia.

The risks highlighted include the prospect of as many as three interest rate hikes by the US Federal Reserve, the strengthening of the US dollar and economy, and the threat of trade tariffs imposed by new President Donald Trump.

In China average values have already been showing signs of decline, after 21 city governments announced new cooling measures late last year to quell soaring prices.

And, as the report outlines, these measures will likely reduce sentiment most in Hong Kong. It says: “In combination with rising interest rates in Hong Kong, we expect that the new stamp duty will dampen the Hong Kong residential market over 2017.”

“In addition, the stamp duty is likely to have a greater impact on the medium to high end market than on the mass market given strong inelastic demand for housing in the mass market. We forecast that the overall residential market will witness a mild 5% drop in prices by the end of 2017.”

Looking at Singapore, the report notes that prices have been in steep decline since property cooling measures were first introduced in 2013. While Colliers believes that any easing of the measures will return key sectors to growth, it’s worth remembering that as recently as October last year the country’s National Development Minister, Lawrence Wong, reaffirmed that there are no plans to lift the measure anytime soon.

With global uncertainty likely to impact key investment markets throughout the year, UK property is likely to gain further attention from the international investor community in 2017. Widely regarded as a safe haven location, British real estate performance is underpinned by rising demand and one of the lowest levels of supply for a generation.

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