In gentle of China’s reopening and easing of Covid guidelines, Hong Kong’s property market shall be on a path to restoration in 2023, based on property consultancy Colliers Hong Kong.
The retail market particularly will reap the “greatest profit,” Hannah Jeong, Colliers’ head of valuation and advisory providers, informed CNBC’s “Squawk Field Asia” on Thursday.
Nonetheless, there are nonetheless some potential headwinds this 12 months that will undercut Hong Kong’s restoration, Colliers mentioned in its newest report. These embrace continued geopolitical stress and a possible world recession.
“We’re taking a look at a extra cautiously optimistic view for 2023,” Jeong added.
“There shall be totally different uncertainties from exterior components however borders opening is definitely the one of many booster[s] for a lot of different sectors inside the property market.”
Retail to be ‘first runner’
Based on Colliers, the retail sector — particularly the excessive avenue store phase — would be the “first runner” within the post-Covid restoration in 2023 with each rents and costs.
“We’re taking a look at about an 8% improve year-on-year, by way of the retail rental efficiency,” Jeong added.
She mentioned, 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 necessary driver” for Hong Kong’s retail market within the subsequent 12 months.
“The shifted procuring sample of the Mainlanders over the past three years could paint a brand new image to the brand new retail market sentiment,” it added.
Within the workplace sector, Grade A workplace rents will bounce again by 3% this 12 months, mentioned Colliers — due to “pent-up demand from Chinese language and abroad corporations.”
Even so, Jeong mentioned that Hong Kong’s workplace market nonetheless has a excessive emptiness charge, at 14.7%.
“However it’s not it is not the top of the world as a result of … in contrast with different peer cities, 8% to 10% is a usually affordable quantity,” she added.
Residential market demand to dampen
Hong Kong’s residence costs plunged to a five-year low in October as rates of interest hikes pushed up borrowing prices.
This resulted in a “softening of funding demand,” mentioned Jeong, however the demand from homebuyers nonetheless exists.
“Homebuyers … [have been] using this time when market is softening, they’ll snatch the cheaper flats,” she added.
“However in 2023, I feel the rate of interest … will proceed to go up. We’re taking a look at stabilization not less than within the second half of this 12 months.”
Simply final month, Hong Kong raised rates of interest by 50 foundation factors to 4.75%, following the U.S. Federal Reserve.
Excessive prices of borrowing will dampen residential market demand and a “damaging 5% to 10% downward adjustment” ought to therefore be anticipated this 12 months, Jeong mentioned.
