HK moves up investment prospect rankings of 20 Asia-Pacific cities

PUBLISHED : Tuesday, 09 December, 2008, 12:00am
UPDATED : Tuesday, 09 December, 2008, 12:00am

Hong Kong ranks third after Tokyo and Singapore among 20 Asia-Pacific cities for property investment prospects next year, according to a survey.

The survey, 'Emerging Trends in Real Estate Asia Pacific 2009', conducted by the Urban Land Institute and PricewaterhouseCoopers, covers investment and development prospects in the chosen cities. Hong Kong ranked fifth and 11th in two previous surveys.

The survey was conducted over the past 15 months and opinions were polled from about 180 leaders in the Asia-Pacific property market.

'Asia shares the same liquidity crises the balance of the world is facing,' said Stephen Blank, the institute's senior resident fellow for finance.

The liquidity freeze arose from the reluctance of most financial institutions to extend credit as deleveraging cut balance sheet lending capacity.

Mr Blank said the prospect for lenders was a large number of deal or loan defaults in the new year.

'While fundamentals in most markets and property sectors will be impacted by the prospects for a global recession, financing will be the biggest issue facing the industry in 2009,' he said.

Separately, ratings agency Standard & Poor's yesterday revised its ratings outlooks on Hongkong Land Holdings, Hysan Development, Kerry Properties and Swire Pacific from positive to stable on weaker market conditions.

Credit analyst Christopher Lee expected the financial performance of the developers would be unlikely to help them maintain their credit measurements at levels that were supportive of a higher rating over the next 24 months.

'The prospects of a protracted economic slowdown, expansion halts and staff reductions in the financial sector are likely to weaken the demand for office space and hence put pressure on office rentals in 2009. The rental lease reviews that landlords will undertake in early 2009 will shed more light on the severity of the rental correction,' Mr Lee said.

Nevertheless, the survey shows investors' desire to hold or even buy in Hong Kong remains high.

For the office, retail and the residential rental sector, only 21.6 to 24.4 per cent of the respondents recommended sell, and more than 80 per cent advised buy or hold in the industrial-distribution and hotel sectors.