Hong Kong’s veteran property investors head for the exit amid fears of a deep and prolonged correction in prices
- Chances of prices falling higher now as Hong Kong’s economy is worse than it was during the Asian financial crisis in 1997 and Sars outbreak in 2003, says former Midland Holdings executive
- The outlook for Hong Kong’s property market will remain uncertain until the second half of next year, says Joseph Tsang of JLL
Albert Wong Kam-hong, the former deputy chairman of real estate company Midland Holdings, for instance, sold his adjoining flats in The Coronation Tower near Kowloon Station for HK$22 million (US$2.8 million) last month. The 1,206 sq ft property, which he had bought eight years ago, netted him a profit of HK$4.85 million.
He is now renting a unit in the same building, which he was able to secure for 24 per cent cheaper than its peak mid last year. “Hong Kong’s current economic state is even worse than it was in 1997 [during the Asian financial crisis] and 2003, when the city was gripped by Sars [Severe acute respiratory syndrome],” said Wong, founder of Traffic Light Management Consultancy which provides consultancy services to listed firms. “Why hold on to property if I see higher chances of prices falling than an appreciation in value?”
The overall number of property deals, including homes, commercial and industrial buildings, and car parking spaces, dropped about 34 per cent month on month to HK$45.6 billion in August, according to Land Registry data. It was the lowest since the HK$38.35 billion worth of deals in April.
Transactions for properties worth more than HK$100 million have been similarly hit, plunging by 30 per cent to 109 deals in the first eight months of the year, according to Cushman & Wakefield.