Economic recovery drives total residential transactions to a 9-year high　Home price expected to rise by 5% in the second half of 2021, and return to 2019 peak in Q3

• Economic recovery in Hong Kong has driven
  residential transaction upsurge by 20% q-o-q, reaching a nine-year high and its
  peak since 2012
• New home supply over the next two years remains low
  at an average of about 19,100 units per year
• Home prices expected to rise by 5% in the second
  half of 2021 and return to June 2019 peak prior to social events and pandemic
  outbreak in Q3

HONG KONG SAR – Media
OutReach – 8 June 2021 – Global real estate services firm
Cushman & Wakefield publishes Hong Kong Residential Markets Review and
Forecast 2021 Q2 today. Steady economic recovery, declining unemployment rate
and stabilizing pandemic situation, have contributed to significant growth in the
Hong Kong property market in Q2, particularly for the residential market. Residential
transaction has hit a nine-year high in the first half of 2021. Home prices are
expected to return to their peak in Q3 at a level before COVID outbreak and social
events. Resumption of China-Hong Kong travel in the second half of 2021 is expected
to bring in mainland buyers, providing more favourable conditions for an overall
recovery of the local property market.

In the first two-month period of 2021 Q2, the overall total Sales and Purchase
Agreements (S&Ps) stood at 18,590 cases. Combining an estimated 9,500 cases
in June brings the quarterly transactions to 28,090 cases, an increase of 37% y-o-y or
20% q-o-q. Residential transactions rose by 20% q-o-q to 21,709 cases, resulting
in a total of 39,840 cases in the first half of 2021, the highest since 2012 and
a nine-year record.

Mr. Keith Chan, Cushman & Wakefield’s Director, Head of Research, Hong Kong, mentions, “The
economy of Hong Kong shows early signs of picking up with a growth of 7.9% y-o-y in Q1,
and has twisted a six-quarter contraction. With an improving labour market where
the unemployment rate lowered to 6.4%, and the fourth wave of COVID outbreak
under control, the housing market sentiment has turned warm with home prices in
April rose by 4.1% y-o-y. Residential transactions in the first four months of 2021
were dominated by secondary sales which took up 81%, up from 74% in 2020. This number
has returned to the traditional secondary to primary sales ratio of 80 to 20%.”

According to the analysis of Mr. Edgar Lai, Cushman
& Wakefield’s Director, Valuation and Advisory Services, Hong Kong, both mass
residential and luxury residential markets show similar trends. The average
prices of housing estates in multiple districts have increased by over 10% to date
since this year. Take City One Shatin as an example, the average price has increased
by 5.4% in Q2, over 10% since this year, and recorded “five consecutive rises”
with the average price nearing its peak of June 2019. The average price of
Taikoo Shing has also increased by 5.7% q-o-q and is expected to record a 15.3%
increase by the end of June. The luxury home market has also rebounded, with
Bel-Air rising by 9.3% in Q2. This upward trend is expected to continue.

As for private housing supply in the future, a
more reasonable number of about 19,100 new units per year are expected in the
pipeline in the next two years. While slightly above the average annual supply
of 14,300 units in the past ten years, the number is still low compared to the
average of 26,600 units from 1991 to 2000.

Mr. Alva To, Cushman & Wakefield’s Vice President,
Greater China & Head of Consulting, Greater China, commented, “Residential
transactions in Q2 were brisk with upsurge in both volume and prices. The tight
supply of new residential properties was a favourable contributor, but the
support chiefly came from the better-than-expected economic growth, persistent
low interest rates, easing of the pandemic, and further reduction of unemployment
rate therefore unleashing purchase power. Looking ahead, we expect that with
the resumption of cross-border travels in the second half of this year,
mainland buyers will inject momentum into local property sales. The residential
market will remain active in the second half of this year, with room for a 5%
rise in price, or 10% for the whole year. In Q3, it might return to its
historical peak prior to the outbreak of social events in June 2019 and the
pandemic. Luxury residential market is likely to rise by another 5% to 10%
within this year.”