Hong Kong residence gross sales have fallen 40 per cent year-on-year to their lowest degree for the reason that 2008 international monetary disaster, information from the native land registry and projections from actual property companies have proven.
The stoop in one of many world’s priciest actual property markets is anticipated to solely backside out by mid-2023 and residential costs may fall by as much as one other 10 per cent this yr, analysts mentioned.
Final yr “was the worst yr since 2008 for Hong Kong residential”, mentioned Praveen Choudhary, an fairness analyst at Morgan Stanley specialising within the metropolis’s actual property and conglomerates.
House gross sales closed by the property growth arm of Hong Kong’s richest man Li Ka-shing halved from 2021 as town struggled to revive its economic system after years of harsh Covid-19 restrictions. New residence transactions at CK Asset Holdings, Li’s actual property unit, fell from 900 in 2021 to about 450 in 2022 because the territory battled its first vital Covid outbreak, which peaked in March.
The whole transactional worth for its gross sales doubled to about HK$26bn (US$3.3bn) because of the sale of luxurious flats. However gross sales at 21 Borrett Street, a major venture within the coronary heart of town, got here underneath scrutiny after 152 models had been offered for a complete HK$21bn, with the common sq. foot value roughly 1 / 4 decrease than the common of different models offered beforehand.
“The whole transactional worth this yr is best than anticipated,” William Kwok, CK Asset’s chief supervisor of gross sales, advised the Monetary Occasions. “A bulk deal is simply the identical as promoting the models separately in relation to gross sales quantity from the corporate’s perspective.”
Below Beijing’s zero-Covid coverage, Hong Kong solely not too long ago reopened its borders with the remainder of the world and is anticipated to renew quarantine-free journey to mainland China from mid-January.
New residence gross sales agreements plummeted to 10,068 between January and November 2022, from 16,136 over the identical interval of 2021, in accordance with the native land registry, whereas transactional worth halved from HK$214bn to HK$107bn.
Annual residence gross sales agreements in 2022 are projected to be decrease than that of 2008 at 11,046 models primarily based on preliminary December information, in accordance with actual property brokers from local-based Midland Realty and Centaline Property Company.
Stewart Leung, vice-chair of Hong Kong-based actual property conglomerate Wheelock Properties, mentioned builders would “in all probability have to attend till mid-2023 to see the sunshine on the finish of the tunnel”. Wheelock offered almost 600 new houses in 2022 at a complete worth of about HK$9.5bn, in contrast with 2,100 models and HK$33.1bn the earlier yr.
Actual property providers teams JLL and Knight Frank anticipate residence costs to fall by as much as 10 per cent total in 2023, whereas JPMorgan expects an 8 per cent dip in 2023.
Downward stress on residence costs has additionally been aggravated by an exodus of residents following the introduction of latest safety legal guidelines within the metropolis and difficult Covid curbs.
However Paul Chan, Hong Kong’s monetary secretary, mentioned in his weekly weblog be aware on Sunday that he was optimistic concerning the outlook, with town’s reopening of its border with mainland China boosting sentiment within the property market, regardless of the US rate-hiking cycle nonetheless casting a shadow over the sector.
Some property builders “will probably be eager to launch extra residential tasks in 2023 with additional reductions” to get better final yr’s lagging gross sales, in accordance with Eddie Kwok of property group CBRE Hong Kong.
Poor actual property market performances have hit the federal government’s land gross sales income, with an estimated HK$35bn generated in 2022 — a 68 per cent year-on-year drop — in accordance with Martin Wong of Knight Frank.
A plot in Kowloon that would accommodate 1,750 models was final month awarded to CK Asset with a bid of HK$8.7bn, setting a a lot decrease than anticipated common value per sq. foot of gross flooring space at HK$6,138, the bottom since 2014.