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INVESTORS ARE STILL CONFIDENT IN HONG KONG’S PROPERTY MARKET

Posted by Teddy Lam on January 19, 2019
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After two years of above average performance, Hong Kong’s economic
outlook for 2019 should largely hinge on the outcome of the current round
of US-China trade negotiations. The result may come as early as 1 March
2019, 90 days after the G20 summit between President Xi and President
Trump. Nonetheless, Oxford Economics has cut its 2019 real GDP growth
forecast for Hong Kong to 2.2%, the slowest since 2016(1)
.
A further slowdown of China’s economy in 2019, with a government target
of 6.0%-6.5% annual growth rate, will likely add pressure on Hong Kong’s
growth prospects.
While Hong Kong’s external trade and inbound tourist arrival figures in 2018
have not been immediately impacted by the trade war, we shall observe
these figures closely in 2019 as they would have direct implications for the
industrial and retail property sector rents and prices.
While the market sentiment definitely turned negative by end of 2018,
institutional investors are still confident in Hong Kong’s property market.
The results of Annual Hong Kong Investor Survey Report 2018 show
that investors have been taking a wait-and-see approach, starting in H2
2018. With abundant liquidity and the prospect of less interest rate
increases in 2019, we expect that investors will return to the market once
property prices have stabilised. A moderate recovery in residential market in
H2 2019 will be possible if the market reaches bottom before mid-year.
We believe the industrial property sector has the largest upside potential
with the expectation of a new round of industrial revitalisation.

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