In gentle of China’s reopening and easing of Covid guidelines, Hong Kong’s property market might be on a path to restoration in 2023, in line with property consultancy Colliers Hong Kong.
The retail market specifically will reap the “best benefit,” Hannah Jeong, Colliers’ head of valuation and advisory providers, instructed CNBC’s “Squawk Box Asia” on Thursday.
However, there are nonetheless some potential headwinds this 12 months that will undercut Hong Kong’s restoration, Colliers stated in its newest report. Those embrace continued geopolitical stress and a potential world recession.
“We are looking at a more cautiously optimistic view for 2023,” Jeong added.
“There will be different uncertainties from external factors but borders opening is surely the one of the booster[s] for many other sectors within the property market.”
Retail to be ‘first runner’
According to Colliers, the retail sector — particularly the excessive avenue store section — would be the “first runner” within the post-Covid restoration in 2023 with each rents and costs.
“We are looking at about an 8% increase year-on-year, in terms of the retail rental performance,” Jeong added.
She stated, nevertheless, that is nonetheless about 25% to 30% decrease than pre-Covid ranges.
Collier added in its report that regardless of China’s reopening, native consumption will stay “an important driver” for Hong Kong’s retail market within the subsequent 12 months.
“The shifted shopping pattern of the Mainlanders over the last three years may paint a new picture to the new retail market sentiment,” it added.
In the workplace sector, Grade A workplace rents will bounce again by 3% this 12 months, stated Colliers — due to “pent-up demand from Chinese and overseas companies.”
Even so, Jeong stated that Hong Kong’s workplace market nonetheless has a excessive emptiness price, at 14.7%.
“But it’s not it’s not the end of the world because … compared with other peer cities, 8% to 10% is a generally reasonable number,” she added.
Residential market demand to dampen
Hong Kong’s house costs plunged to a five-year low in October as rates of interest hikes pushed up borrowing prices.
This resulted in a “softening of investment demand,” stated Jeong, however the demand from homebuyers nonetheless exists.
“Homebuyers … [have been] utilizing this time when market is softening, they can snatch the cheaper flats,” she added.
“But in 2023, I think the interest rate … will continue to go up. We are looking at stabilization at least in the second half of this year.”
Just final month, Hong Kong raised rates of interest by 50 foundation factors to 4.75%, following the U.S. Federal Reserve.
High prices of borrowing will dampen residential market demand and a “negative 5% to 10% downward adjustment” ought to therefore be anticipated this 12 months, Jeong stated.