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News from Knight Frank Hong Kong

Chinese Mainland and Hong Kong property market 2019 forecast

19 November 2018

 Chinese Mainland Residential Market: 

 
David Ji, Director, Head of Research & Consultancy, Greater China says, “With the new rail and bridge links to Hong Kong, Mainland cities in Greater Bay Area (GBA) recorded strong growth in 2018. Guangzhou, Shenzhen and Zhuhai have clear lead in residential prices among GBA cities on the Mainland, while they are the only cities which have prices above the average among the 9 cities on the Mainland. Looking into the overall residential market on the Mainland In 2019, prices in first- tier cities are expected to increase by between 2-3% while that of second-tier cities are expected to increase by 3-5%. Meanwhile prices in GBA cities are expected to increase a little faster at 5-7% with the improvement in connectivity. Second-tier cities in the region will attract more buyers from wealthy cities such as Guangzhou and Shenzhen, as well as from Hong Kong.” 
 
Hong Kong Residential Market Performance: 
 
Hong Kong's housing market is entering an adjustment phase, Executive Director, Head of Valuation & Advisory, Thomas Lam believes that the property prices in Hong Kong will be adjusted in the next 12-18 months, but will not drastically drop like what happened in 1997. Home prices are projected to drop by 10% in 2019 and stabilise gradually. Government policies and peripheral economics and politics, such as the Sino-US trade war are key factors affecting Hong Kong's residential property market and adjustment range. Factors such as the decline in property prices, increased supply, interest rate hikes, and vacancy tax have made developers more conservative on their investments. They will be more selective and strategic when it comes to land bidding and will not be overly aggressive. Moreover, forming consortiums will also be a rising trend and land prices are anticipated to decline by 5 to 10% in the next 12 months.
 
Maggie Lee, Senior Director, Head of Residential Agency, expects the super luxury residential market will be less impacted by the external shocks, due to the uniqueness of the market. With limited existing and new supply, transaction volume has been low. Buyers will still see luxury residential in Hong Kong as valuable investment. 
 
Hong Kong Office Market:
 
Wendy Lau, Senior Director, Hong Kong Office Services believes that the global economy is full of uncertainties, which has already been reflected in the stock market, companies slowing down their expansion plan and not willing to pay sky-high rent, especially in Central. Looking ahead, we expect the adverse changes in economic conditions and to drag down the office rents of 1% to 4% in Hong Kong Island in 2019. 
 
Hong Kong Retail Market:
 
Helen Mak, Senior Director, Head of Retail Services, expects the prime street retail rents will continue to drop by 5% in 2019 amid wealth effect, trade war and other external factors. With retail sales growth narrowing towards the end of 2018, retailers are once again being cautious. Rents in shopping centres will continue to grow steadily but at a slower pace.