US-China trade war could hurt demand for commercial and industrial property in Hong Kong, says agency
Ricacorp (CIR) Properties expects deals for industrial and office properties to slump by 13 per cent and 15 per cent in second half of 2018
Demand for commercial and industrial properties in Hong Kong could weaken over the next several months as businesses adopt a more cautious approach to expansion amid the trade war between China and the United States, according to the city-based property agency Ricacorp (CIR) Properties. An increase in interest rates could also slow down transactions.
The number of industrial property transactions will drop from the first half
Roy Wong, the agency’s director, said the number of deals for commercial and industrial properties could fall to 4,680 in the second half of 2018, a decline of 12 per cent from the first half.
“The market is worried the US-China trade war could worsen, directly dragging the economy down,” said Wong. “The trade war has made the stock market unusually volatile. If the stock market continues to drop, overall economic performance may be impeded.
“[Banks in] Hong Kong are also very likely to follow in the footsteps of the US and increase [prime] rates in the third quarter, increasing pressure on the market,” he added.
According to the agency, the number of transactions for industrial and commercial properties stretched a four-and-a-half-year rally to hit 5,290 in the first half this year, up 160 per cent from a historic low of 2,022 in the first half of 2016.
Wing Tai Properties sold Winner Godown Building, an industrial building in Tsuen Wan, to a company controlled by the chairman of Billion Development & Project Management for HK$2.16 billion (US$275.3 million) in December.
According to Ricacorp, the trade war may reduce confidence and could make businesses more cautious. “The uncertainty in market outlook, clouded by the trade war, will linger for some time,” said Stanley Chui, its sales director. “Some investors will adopt a wait-and-see attitude. But since most owners are still ambitious in asking prices, the number of transactions will be adversely affected.”