While some Hong Kong property developers reported a fall in profits last year due to sluggish market demand because of high interest rates, insiders expect the industry will recover this year, driven by favorable policies to shore up the market and an expected reduction in the interest rate.
According to the annual results of Swire Properties announced on Thursday, the developer saw its profit turn to the negative trajectory last year, reversing from a profit of HK$2.64 billion ($339 million) in 2023 to a loss of HK$766 million in 2024. Its revenue last year decreased 2 percent to HK$14.43 billion.
Chief Executive Tim Blackburn said Hong Kong’s office market did not perform well over the past 12 months and he expects office demand to continue to be soft in the near future due to oversupply and a lack of new demand.
However, demand for residential properties could increase in the medium and long term, driving up sales, with a gradual reduction in interest rates and easing of mortgage measures, the company said.
Wharf (Holdings) Ltd, a Hong Kong-based conglomerate whose business covers investment properties, hotels and development properties in Hong Kong and the Chinese mainland, also saw a reverse in its profit last year. The group on Thursday reported a loss of HK$3.22 billion yuan ($44.4 million) in 2024, compared with a profit of HK$945 million a year earlier. Revenue dropped 36.07 percent year-on-year to HK$12.12 billion.
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Despite the situation, industry insiders in Hong Kong struck a positive tone concerning the industry’s outlook this year, as signs have already shown that the market has improved in the first quarter.
“This month, as of Tuesday, transactions in new homes have exceeded 1,100. Along with the more than 700 flats that were sold but not registered last month, the number of registrations for first-hand homes in March could hit 2,000, which could hit a four-month high,” said Derek Chan, head of research at Ricacorp Properties.
Chan noted that buying sentiment has improved after a favorable policy was announced during the 2025-26 Budget on Feb 26, which raised the maximum value of properties chargeable to a stamp duty of HK$100 from HK$3 million to HK$4 million. This measure has prompted developers to step up project launches, he said.
Eddie Kwok, executive director of valuation and advisory services at CBRE Hong Kong, agreed that the government initiative is likely to spur more demand for properties valued at less than HK$4 million.
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“Flats valued at less than HK$4 million represented 25 percent of total private residential property transactions last year, and we expect them to take up 30 percent of market share in 2025,” Kwok said.
He also said he believes the improvement in Hong Kong’s stock market could add momentum to the recovery of the city’s property sector.
“Hong Kong’s real estate market has historically been highly correlated with stock market performance, with a few months’ time lag. With the Hang Seng Index surging since the start of the Chinese New Year, we see more buyers enter the market, supporting both housing prices and transaction volume. This trend will likely to continue if the stock market maintains at the current level or goes up further,” Kwok said.
He said he expects Hong Kong’s housing prices to see a mild increase of up to 5 percent this year.
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Jeffrey Lam Chak-fai, lecturer of Treasury Markets Association and School of Professional and Continuing Education of Hong Kong University, took a more conservative attitude, noting that oversupply in residential properties could lead to a continued decline in housing prices.
“If the economy recovers a little, there will be growing demand in the property market,” he said.
“But the main problem is that developers still have a high inventory at present. With the urgent need for funds, developers will inevitably adopt a price-cutting strategy to offload their inventory.”
