Private housing is seen in Taikoo Shing, Hong Kong on Sept 30, 2016. (ROY LIU / CHINA DAILY)
Hong Kong property prices are expected to rise moderately next year, gaining up to 10 percent as increases in United States interest rates remain slow and local real interest rates are likely to remain negative for the whole year, global real-estate services provider Colliers International said on Tuesday.
Vincent Cheung, deputy managing director at Valuation and Advisory Services of Colliers, elaborated that the capital value of mass residential units, including small- and medium-sized homes, will surge 8 to 10 percent while rents will increase 5 to 8 percent. The value and rent for luxury residential units are estimated to rise 3 to 5 percent. Rent is expected to increase by 5 to 8 percent for warehouses while industrial building rents will rise 3 to 5 percent.
The value and rent for luxury residential units are estimated to rise 3 to 5 percent
Cheung said despite the moderate growth, property prices should still face some pressure from rising borrowing costs and the shrinking of balance sheets by major central banks.
Colliers said that with an investment value of $45.9 billion, Hong Kong had been among the top two property investment markets in the world, attracting 24 percent of the outbound flow from the Chinese mainland as investor focus shifted from income-generating properties to development sites. Most transactions were by domestic investors but mainland investors remain active and the trend is expected to continue. Mainland investors have started to show interest in industrial properties.
Colliers said developers from outside Hong Kong had taken up 96 percent of residential site transactions in terms of land value this year; these properties were sold at higher prices than the market had expected.
Cheung said reducing the housing price gap between urban and rural areas and competition from mainland developers will push Hong Kong firms to convert more of their agricultural land banks into housing supply.
The Hong Kong government may convert some industrial buildings into residential units. Cheung said the costs could be relatively high. Hong Kong had 1,488 blocks of industrial buildings with a total area of 259.86 billion square feet; 62 percent of the buildings are more than 30 years old and 10 to 15 percent of industrial buildings belong to independent owners.