Media OutReach<\/a> – 11 March 2021 – Strengthened market sentiment helped boost Hong Kong real estate market
\ngrowth in Q1, unleashing pent-up demand and transactions in both residential and
\ninvestment markets. The wealth effect was amplified by the stabilizing COVID-19
\nsituation locally and the eagerly awaited roll-out of a vaccination program,
\nboth considered prerequisites for sustained economic recovery. <\/p>\n
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Residential
\nMarket<\/b><\/p>\n
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The Q1 period displayed a major rebound in the residential market, driven
\nmainly by the cash-rich condition of local buyers. Total Sales and Purchase Agreements
\n(S&Ps) rose 66% y-o-y to 14,200 cases in the first two months of Q1 2021,
\nwhile residential transactions leapt 69% y-o-y to 10,687 cases in the same
\nJanuary — February period. For March 2021, we expect the total S&Ps would
\ngo up to 9,000 cases, bringing the quarterly figure to 23,200 cases. This
\nrepresents a remarkable growth of 74% y-o-y, or 7% increase q-o-q. <\/p>\n
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Amidst the
\nfourth wave of COVID-19,
\nhome prices dropped in the face of surging confirmed cases between December
\n2020 and January 2021. Taking Taikoo Shing as an example, the average price
\ndeclined by 8.3% during the period. In February, with early arrival of vaccines,
\nstrong pent-up demand from predominantly Hong Kong buyers, a booming stock
\nmarket and other positive factors, transaction volume and home prices quickly
\nbottomed out and began to rebound (Chart 1).<\/p>\n
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The market is adapting
\nto the post-pandemic new normal. From a macro perspective, the market is currently
\nimbued with healthier fundamentals compared with previous periods of market turmoil
\nas a result of the SARS outbreak, the global financial crisis, and other
\ndisruptors (Chart 2). <\/p>\n
Mr Alva To, Cushman & Wakefield’s Vice President,
\nGreater China & Head of Consulting, Greater China<\/b>, commented, “The wealth effect is being driven especially by gains
\nfrom the stock market, quantitative easing measures, and a high 90% loan-to-value
\nratio, and the rebound in property sales is now in a growth momentum. The
\nresidential market is rebounding faster than expected, and we expect home price
\nto rise by 5% in Q2 2021. However, we would advise buyers to remain cautious on
\nthe economic fundamentals throughout 2021. With the unemployment rate at 7% by January
\n2021, and is still increasing with high speed, this will seriously impact on
\nthe purchasing power and intention to purchase. Moreover, an anticipated overall
\neconomic recovery in the second half of 2021 may also be impacted by the still
\nrocky U.S.-China relationship and local and geopolitical uncertainties.” <\/p>\n
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Investment
\nMarket<\/b><\/p>\n
Investment sentiment has been on a recovery track since Q4 2020, following
\nthe rescinding of the Double Stamp Duty (DSD) requirement on non-residential properties
\n(Chart 3). The recovery momentum sustained the performance of the investment
\nmarket in Q1 2021, with retail and industrial properties remaining the most
\nsought-after asset classes over the near term. Investments into the hotel sector
\nremained muted with the continuation of border closures between Hong Kong and mainland
\nChina and the rest of the world. Yet, with the number of confirmed COVID-19
\ncases subsiding and stabilizing, anticipation for a full opening of regional
\nand international travel may encourage tourism and retail recovery in the
\nshort-run.\u00a0<\/p>\n
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Mr Tom Ko, Cushman & Wakefield’s Executive
\nDirector, Capital Markets, Hong Kong,<\/b> concluded, “Major
\ninvestment transactions (transactions over HK$ 100 million) are expected to
\nremain at a similar level of Q4 2020. Luxury residential transactions still
\ncontributed to 61% of total investment volume, as a result of the favourable loan-to-value
\n(LTV) ratio for property investment. The abolition of DSD on non-residential property
\ninvestments, on the other hand, has facilitated investment into retail spaces
\nand industrial assets in Q1. With these favourable factors, together with the
\nrecent pilot scheme to standardize land premium and the influx of deep-pocketed
\nglobal real estates’ funds in Hong Kong, we expect an even more positive market
\ntrend to prevail in the upcoming quarter.” <\/p>\n
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Source link <\/a><\/p>\n","protected":false},"excerpt":{"rendered":"Home Prices Expected to Rise by 5% in Q2 Residential market remained most active with
total transactions rising by 69% y-o-y for January and February combined, and
expected to jump by 73% y-o-y in Q1 Investment into non-residential properties continues
pickup commencing in Q4 2020, with retail and industrial properties remaining
most favoured
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