Non-residential properties are the first to be affected, with prices sharply down by 15% at any time.
Hong Kong Wen Wei Po (by Lai ChiTin)
In the first half of this year, the prices of various types of properties in Hong Kong had fluctuated. From dull at the beginning of the year, then to many large transactions of high price properties when the relationship between China and the United States eased, it was like a roller coaster for property investors. However, with the renewed tension between China and the United States plus the continued political disputes in Hong Kong, the non-residential properties market has fallen into a trough. Especially in Queensway and Hong Kong Central District where political disputes frequently break out, both investments in commercial buildings and shops are affected, and the return from leasing or sale is estimated to be impacted at a certain range. Centaline (non-residential properties) points out that, the market has a strong wait-and-see atmosphere, and there will be decrease of 10-15% on non-residential properties prices in the second half of the year, also the effect to the trading and leasing of commercial shops will be larger.
Centaline (non-residential properties) expects that the market will have a strong wait-and-see atmosphere, and non-residential properties will get into the adjustment period in the short term, then the overall trading volume will drop significantly, also the trading price will fall by 10-15%. Among them, the effect to the trading and leasing of commercial shops will be larger, and Grade A commercial buildings will also be affected. In the long run, as the business environment in Hong Kong is still satisfactory, the non-residential properties market will develop steadily.
Hong Kong Central District and Causeway Bay undertake the largest impacts.
Looking forward to the second half of the year, the managing director of Centaline (non-residential properties), Poon ChiMing points out that, the investment on non-residential properties market is unclear in short term due to the intensive friction between the Sino-US trade relations and the political turmoil in Hong Kong, also the short-term market will be affected, leading the trading to shrink in the next one to two months, so it is believed many companies and brands will have a slight delay in expanding their business. As a result of the demonstrations in Wan Chai and Central areas from time to time, the impact on the shops and commercial buildings in Central and Causeway Bay is expected to have a negative impact on the rent and the trading price.
China and the United States will loose monetary policies to ease the blow.
In terms of long-term development, Poon believes, the Sino-US trade war directly affect investors’ emotion making strong market wait-and-see atmosphere to continue, then the trading volume falls, while it is unavoidable that the United States will cut interest rate to consolidate the strength of both sides, which will enable Hong Kong to continue to maintain the low interest rate environment, benefiting owners of low cost, so it is to see large price cut in the market, also holding properties is more valuable under the quantitative easing policy.
Poon ChiMing points out that, there is no direct blow to industrial buildings, and developers and consortiums will still pay close attention to large industrial projects benefiting from “Industrial Building Activating Policy”, also some individual buyers are believed to be attracted since the lowest prices for small workshop are appropriate, but the overall investment is still dull, so the price and transactions are expected to maintain a stable trend.
However, the Midland (non-residential properties) believes, the United States is expected to end its shrinking balance sheet and interest rate cuts during the year, and China is not exclude to start bailout for economy facing pressure from the trade war, increasing money in the market, so it is estimated the external market conditions will continue to up and down in the second half of the year.
Midland: Chinese capital is constrained.
The Director of Midland Non-Residential Properties Department, Woo HonShing expresses, the leasing and trading prices plus with transactions volume of the overall non-residential properties will be back to stable in the second half of the year under the promotion of the "money market", and the transaction volume is expected to rebound by about 5%. He is particularly optimistic about the commercial buildings, because many new commercial buildings are planned to be put on sale in the second half of the year, which will result in a larger increase in trading volume. Local consortium and foreign funds are still the main force in large-scale transactions around HKD100 million, while Chinese-funded consortium is subject to restrictions on capital outflows from the Mainland, so the performance is still just so so.
The Operations Director and Commerce Director of Midland Non-Residential Properties, Yung HungCheung further expects, the prices of Grade A and Class B commercial buildings will be predicted to rise 5% in the second half of the year if the Sino-US relations are eased and even an agreement is reached smoothly, but the commercial buildings’ prices will maintain stable if two sides failed to reach an agreement, because the owners who are powerful will not sell with largely price cut and mainland may inject capital supporting the prices of commercial buildings. As for the rent of commercial buildings, enterprises are now more cautious about the expansion, so the demand for rental services will not increase significantly, thus it is expected that the trend will be flat in the second half of the year.
Powerful owners are lean to wait and see.
In terms of industrial buildings, the Midland Non-Residential Properties Department Director,Chen WaiChi points out that, the general owners temporarily wait and see, and there is no significant downward revision of the asking price, also the rental price of industrial buildings will be flat in the second half of the year because the owners are powerful. He also points out that, under abundant market funds and driving by the “Industrial Building Activating Policy 2.0”, many owners have applied for the relaxation of their plots to rebuild their industrial buildings with some of them have also been approved by the Town Planning Board, so it is believed to offset the negative factors and is predicted to be one of the focuses of the industrial market in the second half of the year.
For the shops, the Director of Midland Shops, Low ChinHo believes, the RMB will continue to perform softly and is expected to affect the local retail industry. Although the government had announced earlier that it would use HKD20 billion to invest large shop for social welfare purposes, but the plan will not be implemented as soon as the first quarter of next year, which means that the shops market will still not officially benefited from this plan in the second half of this year.
However, Low ChinHo believes, the price of shops in the second half of the year will remain flat, especially in the core areas, because the general owners are strong. People's livelihood shops have not been affected too much due to supports from local citizens, so it is believed these style of shops will still be sought after by investors, thus the prices of them are expected to be flat. As regards the transaction volume of shops, it will be difficult to fall again in the second half of the year since it is in the bottom currently.