Hong Kong’s commercial property transactions are expected to rebound in the fourth quarter as recent mortgage relaxation measures invigorate buyers amid interest rate cuts, according to local property agency Centaline Commercial.
Centaline Commercial Managing Director Stanley Poon Chi-ming on Tuesday said he estimates that the commercial real estate market could see 820 deals over the three months through December, up from 696 transactions in the third quarter.
Lackluster sentiment has been chipping away at the city’s commercial property market, which recorded HK$13.76 billion ($1.77 billion) in transaction value in the last three months, down by 9 percent quarterly. The number of deals dropped by 21 percent quarter-on-quarter.
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To stimulate the city's property market, Chief Executive John Lee Ka-chiu announced mortgage relaxation measures for both residential and non-residential properties in his third Policy Address last Wednesday.
Under the new rules, property buyers can finance up to 70 percent of their purchase price. Additionally, the maximum debt-servicing ratio has been increased to 50 percent from 40 percent.
Poon said favorable policies in the 2024 Policy Address, coupled with the US Federal Reserve’s oversized 50-basis-points rate cut and China's stimulus measures, will improve property investment sentiment.
However, he added that the prices of shops and industrial buildings may drop by as much as 10 percent, while office prices may stabilize in the last quarter of 2024.
Canada-based commercial real estate agency Colliers said on Tuesday that its research indicates a weaker US dollar and high prices in regions like Japan and Singapore may redirect capital toward undervalued markets like Hong Kong and the Chinese mainland.
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“Non-local buyers, including institutional and property funds, may explore investment opportunities in the first half of next year as lending sentiment starts to improve,” researchers at Colliers wrote.
Kathy Lee, head of research at Colliers, said that the high-street shop rental market shows resilience as brands are eager to upgrade their corporate real estate profiles by targeting prime locations in Causeway Bay and Central, where they can benefit from appealing rental rates.
She said she anticipates a positive investment sentiment and optimism in the retail market for the rest of 2024, which will benefit the shop and hotel sectors in core commercial areas.
