HONG KONG, July 30, 2013 /PRNewswire/ -- Cushman & Wakefield, the world's largest privately owned real estate services firm, today released the first half of 2013 trends for the Hong Kong investment and residential markets and the outlook for the second half of the year.
The number of transactions remains at a low level in 2H 2013; capital values to undergo a mild correction of 5% to 10%
The overall market saw investment activity drop sharply in the second quarter after the government imposed its latest round of market tightening policies in February. The policies have effectively removed short-term investors and speculators from the market, while reigning in price growth across the wider property market. Total overall investment volume and the number of transactions with a consideration above HK$100 million dropped by 26% and 55% q-o-q, respectively, in the second quarter. The office investment market could not escape the impact of the policies with investment value having dropped by 54% q-o-q and prices stabilizing. Nonetheless, in the wake of the slowdown, several projects captured investors' attention, while several en bloc and whole floor transactions were executed by end-users and investors. For example, units and floors offered for sale in the redevelopment project by Henderson and Hip Shing Hong in Island South quickly sold out. The industrial and retail investment markets suffered a greater slowdown in activity with investment value dropping by 83% and 66% q-o-q, respectively. The new measures shifted investors away from retail and industrial properties, notably those in core locations and also those which had grabbed attention from speculators. Capital values eased as a result will further ease in the second half. Kent Fong, Executive Director, Investment -- Hong Kong, said, "Investors are still cash rich and willing to deploy their capital on the right opportunity; while many sellers are not eager to lower prices as the low interest rate environment persists and their holding power remains strong. Therefore, we foresee that transaction volume will remain low in the next six months. It will bring a mild correction of 5% to 10% in capital values across all sectors in the next six to twelve months."
Market has digested the new ordinance and more new launches are expected in the rest of 2013.
The number of overall residential transactions dropped by 30% q-o-q and 49% y-o-y during the second quarter, marking the worst quarter of sales activity over the last decade. Investor and overseas buyer demand has been trimmed by the Buyer Stamp Duty (BSD) and Double Stamp Duty (DSD), especially in the luxury market, where the number of units sold with a value above HK$10 million dropped to 959 in Q2, a decline of 45% q-o-q and 51% y-o-y. Also putting a damper on sales was the Residential Properties (First-hand Sales) Ordinance which delayed launches in the primary market. Weaker expectations and fewer buyers in the market caused luxury residential prices to soften by 1.4% q-o-q in the second quarter. Vincent Cheung, National Director, Valuation & Advisory -- Greater China, said, "Many investors have retreated from the residential market and currently only 5% of buyers are corporate buyers, leaving end-users as the primary source of demand. Developers will increase new launches in the second half of the year after revising their marketing materials and the number of transactions will slightly increase. Market sentiment has turned increasingly cautious after the US Fed hinted at possibly reducing its stimulus, which would trigger a hike in interest rates and impact property prices. We anticipate that as a result, residential prices will correct by 5% to 10% over the next 12 months."
About Cushman & Wakefield
Cushman & Wakefield is the world's largest privately-held commercial real estate services firm. The company advises and represents clients on all aspects of property occupancy and investment, and has established a preeminent position in the world's major markets, as evidenced by its frequent involvement in many of the most significant property leases, sales and assignments. Founded in 1917, it has 253 offices in 60 countries and more than 15,000 employees. It offers a complete range of services for all property types, fully-integrated on a global basis, including leasing, sales and acquisitions, debt and equity financing, investment banking, corporate services, property management, facilities management, project management, consulting and appraisal. The firm has more than $3.7 billion in assets under management. A recognized leader in local and global real estate research, the firm publishes its market information and studies online at www.cushmanwakefield.com/knowledge. In Greater China, Cushman & Wakefield maintains seven market-leading offices in Beijing, Shanghai, Chengdu, Guangzhou, Shenzhen, Hong Kong and Taipei. More information is available at www.cushmanwakefield.com.
