Cushman & Wakefield: Hong Kong full-year property price growth expected at around 7%; residential rents poised to rise 5% to 7%

Cushman & Wakefield's Deputy Managing Director and Head of Hong Kong Research, Rosanna Tang, said that taking into account the slowdown in transactions in the third quarter, the full-year residential transaction volume forecast has been adjusted to around 67,000 to 68,000 units. On prices, if interest rates are raised again in the fourth quarter, the property market is expected to be mainly in adjustment mode in the short term, with full-year residential prices fluctuating within a narrow range of around 7% growth, similar to the increase in the first eight months of this year. As for the rental market, supported by leasing demand from professionals, students and new arrivals to Hong Kong, full-year residential rents are expected to rise 5% to 7%. Although this price forecast has been revised down from the previous forecast of 10% growth, Rosanna Tang pointed out that because the market is still supported by rising rents, the forecast figure will not be lowered excessively, and prices in the fourth quarter are expected to fluctuate within a range of plus or minus 1% to 2%. Alva To, Senior Director of Cushman & Wakefield's Hong Kong Valuation and Advisory Services, said that as purchasing power in the market has been gradually released over the past year, along with US interest rate hikes, the firm's number of enquiries in September fell 35% from the year's high in May. On the other hand, he expects that if the US raises interest rates again, Hong Kong banks are more likely to follow suit this time due to higher Hong Kong interest rates and funding pressure. However, To also noted that with the property market expected to turn quieter from the fourth quarter to early next year, this will help accumulate pent-up purchasing demand, and once there are no more interest rate hikes next year, a "mini spring" is expected in the first half of next year. On offices, Cushman & Wakefield's Managing Director of Hong Kong, John Siu, expects rents in Central to rise 12% to 14% for the full year, which is expected to drive full-year rents for Hong Kong Grade A office buildings up by about 5% to 7%, but Grade A office rents in Kowloon East are expected to fall 3% to 5%. Although the overall vacancy rate may have already peaked in the cycle last year, non-core areas still need a longer time to absorb existing vacant floor space. By year-end, the overall vacancy rate is expected to remain stable at around 19% to 20%. On retail, Siu expects that continued improvement in various economic indicators in the coming months will help sustain the resilience of Hong Kong's local consumption, and tourist spending is expected to recover further. He believes that local and overseas brands will still maintain a cautious attitude toward expansion plans, with site selection focused on core retail areas. Therefore, it is forecast that rents for first-tier street shops in core areas will continue a mild recovery trend, with Causeway Bay and Central possibly recording full-year rental increases of 2% to 3%, while Tsim Sha Tsui and Mong Kok are expected to see slight growth of 1% to 2%.