In the light of China reopens and loosen regulations on covidAccording to real estate consulting firm Colliers Hong Kong, the Hong Kong property market will recover by 2023.
The retail market in particular will be in “best interests,” Hannah Jeong, Colliers’ head of valuation and consulting services, told CNBC.Asian Squawk Box” on Thursday.
However, there are still a number of potential obstacles this year that could hinder Hong Kong’s recovery, Colliers said in his report. latest report. These include continued geopolitical tensions and the possibility of a global recession.
“We are looking at a more cautiously optimistic view for 2023,” added Jeong.
“There will be various uncertainties from external factors but the opening of the border is definitely one of the driving factors.[s] for many other areas of the real estate market.”
Retail is ‘first runner’
According to Colliers, retail sector — especially in the high street store segment — will be the “first place winner” in the post-Covid recovery in 2023 in terms of both rents and prices.
“We’re looking at an increase of about 8% y/y in terms of retail rental performance,” added Jeong.
However, this is still about 25% to 30% lower than pre-Covid levels, she said.
Collier added in his report that although China has reopened, local consumption will remain “an important driver” for the Hong Kong retail market over the next 12 months.
“The change the shopping pattern of mainlanders over the past three years could paint a new picture for new retail market sentiment,” it added.
In the office sector, Grade A office rents will rebound by 3% this year, Colliers said – thanks to “pent-up demand from Chinese and foreign companies”.
Even so, Mr. Jeong said that the Hong Kong office market still has a high vacancy rate, at 14.7%.
“But it is not the end of the world because … compared to other peer cities, 8% to 10% is a generally reasonable number,” she added.
Demand in the housing market declines
Hong Kong house prices fall to 5-year low in October when rising interest rates push up borrowing costs.
This resulted in “declining investment demand,” says Jeong, but demand from homebuyers persisted.
“Homebuyers… [have been] Taking advantage of this moment when the market is softening, they can grab cheaper apartments,” she added.
“But in 2023, I think interest rates… will continue to rise. We’re looking at stability at least into the second half of the year.”
Just last month, Hong Kong interest rate hike by 50 basis points to 4.75%according to the US Federal Reserve.
Mr. Jeong said high borrowing costs will dampen demand in the housing market and a “negative correction of 5% to 10%” could therefore occur this year.
