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Just Released: "Hong Kong Real Estate Report Q1 2014"

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2014-01-03 19:50:23 - Fast Market Research recommends "Hong Kong Real Estate Report Q1 2014" from Business Monitor International, now available

The real estate market in Hong Kong is characterized by consistent demand stemming from its financial and retail reputation as well as notable structural challenges as its integration with China continues. Significant increases in middle-income Chinese tourists has boosted both real estate and industrial investment opportunities, as international brands and modernized logistics facilities compete for space on all levels.

Though retail and industrial rents have been boosted by increased consumption from the mainland, long term questions remain as to the pattern of Chinese demand as well as Hong Kong's own economic slowdown. With the abovementioned factors in mind, we have revised our real GDP growth forecasts marginally upwards to 2.8% from 2.4% previously. In 2014, however, BMI maintains projection for GDP

growth of 3.0%, which remains below consensus estimates of 3.5%.

Economic momentum in the region, particularly in China, appears to be on the uptick and this is likely to translate into stronger shipments for Hong Kong. However the economy faces tough headwinds, from its exposure to China to the impact of looming interest rate rises in the US that could depress prices after years of high growth.

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Key Points

* Demand and consumption patterns in Mainland China as well as U.S. interest rate decisions will be the most significant external risks to Hong Kong's commercial real estate sector through 2013 and into 2014. At present, the government is struggling to manage its relationship with CCP Beijing and a population increasingly resistant to further economic integration with the mainland. Over 70% of all tourists in H113 originated from Mainland China, a revenue stream which would have profound effects on the market should it be reduced or restricted. With regard to the United States, the present currency peg directly links US monetary policy decisions with Hong Kong's own market, making any increase in interest rates even more significant.
* Hong Kong's economy slowed in Q313, with real GDP growth decelerating to a seasonally adjusted 0.5% quarter-on-quarter (q-o-q) from 0.7% in the previous quarter. Unsurprisingly, the main drag on growth came from slowing private consumption and weak exports. Indeed, retail sales have largely been slowing, with growth decelerating from a high of 20.7% y-o-y in April to just 5.1% in September. Diminishing support from the export sector was also unsurprising, given that container throughput has been in contraction for most of 2013.
* While the government has actively sought to promote both industrial and retail investment opportunities, it has pursued the opposite course with regard to the housing market. The year 2013 saw tighter property restrictions as well as a doubling of the sales tax on all transactions over HKD2mn in an attempt to curb speculative investment and control price levels on a property market which is already one of the most expensive in the world.
* Growing concerns of a hard-landing in Hong Kong's property market have started to surface. Not only have residential property transactions plummeted, but property prices have also declined 2.9% since the peak made in March earlier this year. Additionally, growing incidence of heavy discounting on new luxury projects has given the impression that property developers are looking to unload their inventory before a correction sets in.
* 2013 began with a new round of liberalisation in its cross-border relationship with China. January 1 saw the ninth supplement of the Closer Economic Partnership Agreement (CEPA), essentially a free trade agreement, come into force. A total of 37 liberalisation measures across 22 service sectors were introduced. The measures seek to broaden Hong Kong's economic structure and carve out further competitive advantages for the city's endeavours to develop six new industries aside from the four traditional pillar industries of financial services, trading and logistics, tourism and producer and professional services.

About Business Monitor International

Business Monitor International (BMI) offers a comprehensive range of products and services designed to help senior executives, analysts and researchers assess and better manage operating risks, and exploit business opportunities, across 175 markets. BMI offers three main areas of expertise: Country Risk BMI's country risk and macroeconomic forecast portfolio includes weekly financial market reports, monthly regional Monitors, and in-depth quarterly Business Forecast Reports. Industry Analysis BMI covers a total of 17 industry verticals through a portfolio of services, including in-depth quarterly Country Forecast Reports. View more research from Business Monitor International at

About Fast Market Research

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