More pain in store as price, rental woes deepen
Doris Chan and Sophia Wong
The property market faces another tough year after a disappointing performance last year, according to analysts.
They said negative effects from global economic uncertainty would continue to hit confidence and exert pressure on the residential and office sectors.
An oversupply of flats is expected to continue, causing home prices to slide further in the first half.
However, property consultants expect primary residential transactions to increase because most developers would continue to offer low prices for new developments and keep competing for buyers with mortgage subsidy plans.
Small flats priced at HK$2 million or below are expected to be the focus of primary sales in light of growing demand.
Weakened demand and deferred expansion plans by many large corporations will also exert great pressure on office rents.
DTZ Debenham Tie Leung research director Alva To Yu-hung said prime office rents would fall 10 per cent in the first quarter.
He expected to see a slow take-up in prime areas, considering the growing number of break-lease spaces. Agents estimated that office rents fell 20 per cent to 30 per cent last year.
Property consultants said home prices in the mass and luxury markets had dropped more than 10 per cent since the beginning of last year.
Eleven consecutive interest-rate cuts had a limited impact in boosting market confidence due to growing fears of lay-offs and global political and economic tumult.
Colliers Jardine said rental gains in the luxury sector in the first half of last year were wiped out after the September 11 terrorist attacks in the United States.
According to Centaline Property Agency, home prices in many popular private housing estates dropped 10 per cent to 20 per cent in the second half last year amid aggressive pricing in new developments.
Dao Heng Securities analyst Eric Yuen said the market lacked support from buyers trading up, despite last year's rate cuts.
'It's unlikely a rebound will be seen in home prices in 2002 with the abundant housing supply in the residential market,' he said.
More than 35,000 private residential units could be released for sale this year, almost double the average annual absorption rate of 20,000 units in recent years, Mr Yuen said.
Wharf (Holdings) assistant director Ricky Wong Kwong-yiu said the group would release for sale this year about 2,000 residential units worth about HK$8 billion.
These include Bellagio phase one in Sham Tseng and Sorrento phase two at Kowloon Station.
This year's primary sales were officially kicked off yesterday by Henderson Land's Metro Harbour View in Tai Kok Tsui and Chinachem Group's Marbella in Ma On Shan.
However, buyers' response appeared to be slowing.
A Henderson spokesman said Metro Harbour View sold 18 units within an hour.
Sandia Lau Ying-lam, senior associate director of Centaline, said additional units were released and about 40 units had been sold by yesterday evening.
Agents said Chinachem sold more than 20 Marbella units yesterday.