Hong Kong’s overheated office prices to bear brunt of trade war, volatile markets and rising rates, says Savills
- Prices of grade A offices and prime street shops are forecast to drop 5 per cent next year
- Housing prices could fall by up to 10 per cent, says Savills
Savills said that sales prices of offices in Hong Kong will fall next year, becoming the first big consultants to predict the downturn, as the trade war, stock market volatility and rising interest rates take a toll on the sector.
Prices of grade A offices and prime street shops will drop by as much as 5 per cent, while home prices will see a much larger decline of up to 10 per cent, according to Savills. Prices of all other categories, such as Central grade A offices, town houses and industrial units may see no growth.
“Record high prices … have dented Hong Kong’s appeal for investors,” Savills said.
Prices of grade A offices have rallied 16.6 per cent from December 2017 to September this year, with space in Central costing HK$63,610 per sq ft in September. If prices drop, it will be the first since December 2017, according to Rating and Valuation Department.
Simon Smith, head of research at Savills, said on Tuesday that the property sector has seen a slowdown in price growth “due to interest rate increases and the recent stock market volatility”.
Stock market corrections usually herald property market corrections three to six months later, Savills said, adding that the volatility and muted business confidence has caused occupiers to rein in expansion plans and wait for a clearer picture to emerge.
The consultancy said that supply from strata sales of The Center could cap price growth for the next three to six months.