Dwelling gross sales in Hong Kong fell 40 % year-on-year to the bottom degree because the 2008 world monetary disaster, information from the native land registry and forecasts from actual property companies confirmed.
Analysts mentioned the downturn in one of many world’s costliest actual property markets is anticipated to ease by mid-2023 and residential costs might drop by as a lot as one other 10 % this yr.
Final yr was “the worst yr since 2008 for Hong Kong residential buildings,” mentioned Praveen Choudhury, an fairness analyst at Morgan Stanley who makes a speciality of actual property and conglomerates within the metropolis.
Gross sales of properties sealed by the true property growth arm of Hong Kong’s richest man Li Ka-shing have halved from 2021 as town struggles to revive its economic system after years of harsh Covid-19 restrictions. New dwelling transactions at CK Asset Holdings, Li’s actual property unit, fell from 900 in 2021 to about 450 in 2022 because the area grappled with the primary main outbreak of the Covid virus, which peaked in March.
The overall transaction worth of its gross sales doubled to round HK$26 billion (US$3.3 billion) because of the sale of luxurious flats. However gross sales at 21 Borrett Highway, a flagship growth within the coronary heart of town, have come underneath scrutiny after 152 items have been offered totaling HK$21 billion, with a mean value per sq. foot lower than the typical of different beforehand offered items. .
“Complete transaction worth this yr is best than anticipated,” William Kwok, director of gross sales at CK Asset, advised the Monetary Instances. “A bundle deal is rather like promoting items separately on the subject of gross sales quantity from an organization perspective.”
Below Beijing’s non-coronavirus coverage, Hong Kong has solely lately reopened its borders With the remainder of the world, non-quarantine journey to mainland China is anticipated to renew from mid-January.
New dwelling sale agreements fell to 10,068 between January and November 2022, from 16,136 throughout the identical interval in 2021, in keeping with the native land registry, whereas transaction worth halved from HK$214 billion to HK$107 billion.
Annual dwelling gross sales agreements in 2022 are anticipated to be decrease than these in 2008 at 11,046 items based mostly on preliminary information for December, in keeping with actual property brokers from native actual property company Midland Realty and Centaline Property Company.
Builders “might have to attend till mid-2023 to see the sunshine on the finish of the tunnel,” mentioned Stewart Leung, vice chairman of Hong Kong-based Wheelock Actual Property Group. Wheelock offered practically 600 new properties in 2022 with a complete worth of round HK$9.5 billion, in contrast with 2,100 items and HK$33.1 billion within the earlier yr.
Actual property companies teams JLL and Knight Frank count on dwelling costs to fall by as much as 10 % general in 2023, whereas JPMorgan expects an 8 % decline in 2023.
The downward strain on home costs has additionally been exacerbated by an exodus of residents following the introduction of recent safety legal guidelines within the metropolis and strict Covid restrictions.
However Paul Chan, Hong Kong’s monetary secretary, mentioned in his weekly weblog on Sunday that he was optimistic in regards to the outlook, with town’s reopening of its border with mainland China boosting sentiment within the property market, regardless of the persevering with cycle of US price hikes. Forged a shadow over the sector.
Some property builders “shall be eager to launch extra residential tasks in 2023 with extra reductions” to recapture final yr’s lagging gross sales, in keeping with Eddie Kwok of Hong Kong actual property group CBRE.
Poor efficiency in the true property market has affected income from authorities land gross sales, with an estimated HK$35 billion generated in 2022 – a 68 per cent year-on-year drop – in keeping with Martin Wong of Knight Frank.
A plot of land in Kowloon that would accommodate 1,750 items was awarded final month to CK Asset with a suggestion of HK$8.7 billion, which put the typical value per sq. foot of gross flooring space a lot decrease than anticipated at HK$6,138, which is The bottom degree since 2014.