Hong Kong’s unrest to determine property market sentiment more than Wuhan pneumonia crisis, says Colliers
- Impact of Wuhan pneumonia crisis on Hong Kong’s property prices will not be as severe as Sars epidemic, says Colliers managing director Nigel Smith
- Real estate consultancy however expects mass residential property prices in Hong Kong to fall 5 per cent this year
The fallout on Hong Kong’s property market from the Wuhan pneumonia outbreak is too early to predict, according to Colliers, even as the impact of the Sars epidemic on the sector is still fresh in the minds of investors. However, the property consultancy expects sentiment to only improve once the social issues are resolved along with the city’s economy.
“I don’t think any of the effects [of the Wuhan pneumonia outbreak] would be as severe as Sars [severe acute respiratory syndrome],” Nigel Smith, managing director of Colliers, said on Tuesday. “I think there are other factors and social issues that we experienced last year that still need to be resolved.”
The real estate consultancy said in its 2020 outlook for Hong Kong that it expects mass residential property prices to fall 5 per cent and rents to dip 3 per cent. Luxury home prices may experience a sharper decline of up to 10 per cent compared to a sight 0.4 per cent gain a year ago. At the same time, rents in the high end segment could drop by up to 8 per cent from a 0.2 increase last year.
Investors, however, are already feeling jittery. On Tuesday, up to 20 per cent of the more than 250 prospective buyers who had signed up to buy 30 flats in Henderson Land Development’s luxury residential project, The Richmond, in Mid-Levels West, did not show up at the sales office.
Louis Chan, vice-chairman for Asia-Pacific at Centaline Property Agency, blamed their absence on the pneumonia outbreak in Wuhan and Hong Kong’s stock market, which dropped 2.8 per cent.
During the height of the Sars respiratory epidemic between February and July 2003, Hong Kong’s new home prices dropped 9 per cent, while second-hand market transactions fell by 67 per cent. In comparison, the average price of a new home dropped by 25 per cent in 2019, the largest fall in 13 years, as anti-government protests which erupted in June over the now-withdrawn extradition bill rocked the market.