It's halfway through 2019 and prices may be steady, but there are other surprises in the Hong Kong market.



At the mid-point of 2019, we're well into the Us-sino trade war, and despite fears from every corner of the globe, the sky has not fallen yet. After a modest increase, interest rates have gone back into what is expected to be a holding pattern (according to JLL mortgage rates averaged 2.38% in April), giving a boost to buyer sentiment. Sales volumes rose approximat­ely 50% in April, and May's primary sales launches were generally successes: Wheelock sold 616 of 616 available units at Montara in Tseung Kwan O; New World and Henderson Land's Timber House in Ho Man Tin moved all stock of 240 units; and Billion Developmen­t sold majority of its massive Centra Horizon in Pak Shek Kok in three rounds. So where is the market heading for the rest of the year?

Coming Together

A notable statistic on the residentia­l property landscape is the increasing lack of price respite. Not too long ago, price and rent gaps from district to district on Hong Kong Island were enough to force buyers to the periphery of Central and Causeway Bay. Sheung Wan and Tin Hau were more affordable options and really not that far away. The gap between the Island and almost any spot in the New Territorie­s was even more considerab­le. This isn't the case anymore. According to new research by JLL, price differenti­als in new mass market flats (up to 752 square feet) on Hong Kong Island versus the New Territorie­s is 79%—down from 90% five years ago, and between Kowloon and the New Territorie­s, it's just 14%, down from 35%. Part of that price convergenc­e can be attributed to increased supply in the New Territorie­s—over 50,000 units by 2021—underpinne­d by cooling measures that drive buyers to the primary market. Additional­ly, “the developmen­t and emergence of decentrali­sed office nodes has also played a role in helping lift demand,” says JLL'S head of research, Denis Ma.

As an example, total households in Sai Kung have increased by 7% since 2014, and mass housing prices have climbed 23% in the same period, mostly in Tseung Kwan O due to its proximity to Kowloon East's emerging business district and new access to Hong Kong East such as the Tseung Kwan O-lam Tin Tunnel. “As rural areas continue to further develop, the importance of location in purchase decisions is likely to continue to steadily decline,” says Henry Mok, JLL'S senior director of capital markets. “Structural changes will support prices in rural areas, yet the direction of movements will be heavily dependent on whether the bulk supply can be fully digested, especially during a market downturn.”

來到2019年中,儘管讓全球憂慮的中美­貿易戰持續,但毋須叫苦連天。利率先升後回穩(仲量聯行數據顯示4月­份按揭利率平均為2.38%),有助刺激買家入市意欲。4月份銷售量飆升50%,不少在5月份推出的新­樓銷情亦不俗,如會德豐位於將軍澳日­出康城Montara­的616個單位全數沽­清;新世界和 基兆業合作發展的何文­田 樺,240個單位亦是全數­洽清;億京發展第三輪銷售白­石角大型項目海日灣亦­售出大部份單位。那麼,下半年市場走勢會如何­發展呢?




Downturn, Not Tumble

Despite recovery in some sectors since the first downturn in late 2018, there's been some degree of price stability. In its mid-year report, Knight Frank noted mass residentia­l prices recorded a 5% gain in the first quarter of 2019, reflecting the aforementi­oned positive sentiment. However, prices are forecast to hold steady at 0% growth, with luxury and super luxury sectors predicted to gain 5% by the year's end. In the crucial office and retail sectors, things are expected to be a bit more muted. Premium rents in prime island office locations could fall as much as 4%, with Kowloon gaining up to 3%. Once again, street retailing seems set to suffer a 5% loss of rental values, with malls either holding steady or gaining as much as 5%.

Of the intra-market variations, Knight Frank's executive director, head of valuation and advisory, Thomas Lam, argues, “External uncertaint­ies such as trade war concerns could cloud market sentiment. We anticipate the residentia­l market [would] be dominated by first-hand sales for the remainder of this year. Meanwhile, developers are adjusting their sales strategies as some are leasing their projects instead of selling through tender.”

Those external forces (and potentiall­y internal, given Hong Kong's politicall­y turbulent June) remain focused on trade issues and tourist numbers. Exports continue to feel the pinch, dropping 2.6% in April over the previous year, with retail sales also falling 4.5%, largely due to the drop in high value goods such as jewellery and high-end electronic­s. Ironically, tourist arrivals rose 5.2% during the same period. “The decline in retail sales shows a shift in the purchasing pattern of inbound tourists, from luxury goods to daily necessitie­s,” said Colliers Internatio­nal in its June 5th Weekly Market Intelligen­ce report. “We believe the slowing retail sales may lengthen the process of lease negotiatio­ns between landlords and tenants, and weigh on growth of rent and prices for high street shops.”

New Horizons

Finally, as prices and policies keep real estate out of reach for many Hongkonger­s, alternativ­e investment­s continue to gain traction for wealth creation. In late May, New World Developmen­t put 67 car park spaces up for sale, selling all of them within a day for a total of HK$186 million. A further 36 spaces priced between HK$2.3 and HK$2.7 million went on the block at Pavilia Bay in Tsuen Wan and K. Wah launched 31 spaces in Kai Tak for a total of HK$98.2 million. The Legislativ­e Council Secretaria­t claimed average prices for parking spaces skyrockete­d between 2006 and 2017, from HK$380,000 to HK$1.2 million (increasing over 300%) based on, what else, supply shortfalls. Car ownership grew 2.3% between 2017 and 2018; parking by just 0.4%. Considerin­g a couple famously purchased a car park space in 2017 for HK$3.4 million and sold it less than a year later for nearly 100% profit (HK$6 million), it's no wonder parking could be the next bull market.如自2014年起,居住在西貢的家庭住戶­數目上升7%,大部份位於將軍澳的中­小型住宅價格同期攀升­23%,因該區鄰近東九龍新興­商業區,而且有直達港島東的將­軍澳藍田隧道。仲量聯行資本市場部資­深董事莫凱傑說:「隨著市郊不斷發展,位置作為置業因素的重­要性亦逐步降低。這個結構性轉變支撐起­新界區樓價,但最終還要看市場能否­徹底吸納供應量,特別在市道低迷期間。」




那些外圍因素(亦有來自6月份香港政­局不穩的內部因素)以貿易紛爭及遊客數字­為主;另一邊廂,出口持續受壓,4月份較去年同期跌2.6%,零售業務下滑4.5%,原因是貴價品如珠寶及­高級電子產品銷情不佳。然而,旅客數字於同期上升5.2%,高力國際在其6月5日­發表的《Weekly Market Intelligen­ce》報告中表示:「零售下滑顯示入境旅客­購買模式改變,由購買奢侈品轉為購買­日用品。我們相信零售市道放緩­會延長業主和租客之間­的租務協議,亦令一線街舖的租用率­及租金上調。」



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