Prominent analyst Andrew Look has painted a stark outlook for Hong Kong's property market, suggesting it may be ensnared in a bearish cycle for an extended period. Amidst this backdrop, Look anticipates that commercial real estate will face steeper price declines, exacerbated by smaller developers offloading assets in a burgeoning oversupply.
His cautionary stance aligns with recent findings indicating that Hong Kong workers require a significant salary increase to abandon flexible work models. This trend could compel more businesses to shrink their physical office space, potentially leading to reduced demand and lower rental prices.
Look foresees further dips in residential and office property values, although he suggests that retail space prices might have reached their lowest ebb.
He also highlighted Hong Kong's diminishing intermediary role between the US and China amidst escalating tensions, and he speculated that the city might not mirror the US's monetary policy even if the Federal Reserve slashes interest rates.
A Bloomberg Intelligence survey, which gathered responses from 350 Hong Kong residents, revealed that 27 percent would seek higher wages, with most desiring at least a 6 percent hike, in exchange for a full five-day office workweek. Additionally, 24 percent of respondents would consider switching jobs to maintain flexible work conditions.
As companies ponder hybrid work models as a strategy to attract and retain employees while also cutting down on office space, Bloomberg Intelligence analysts, including Patrick Wong, project a potential drop in office rents by a minimum of 6 percent in 2024. This prediction comes after observing a similar annual decline in rents over the past three years, according to their research.
