HONG KONG: Hong Kong announced on Thursday, January 4, that it would not buy any residential or commercial property during the first three months of 2024 due to high vacancy rates and sluggish industry sentiment.
Analysts noted that this would be the first time the government of Hong Kong has never distributed any residential properties in a weekly sale, highlighting the region’s low demand for one of the most expensive real estate markets in the world.
The decision followed six unsuccessful residential and commercial land auctions in 2023, the most on report, and the sale of a private remote land site to the sole bidder at the lower end of price expectations next month.
According to official information, personal house prices in Hong Kong dropped to their lowest level since February 2017 for the eighth consecutive month. Analysts predicted that despite a higher interest rate environment and poor purchasing attitude, they would continue to decline in the first half of 2024.
The government wo n’t separately put up any personal sites for sale in the fourth quarter due to the market sentiment in land tender, according to Secretary for Development Bernadette Linn, who spoke at a press conference. The fiscal year ends in March.
In order to create 11, 530 apartments, which is very close to the state specific of 12, 900, she added area offer from different sources for this fiscal year.
According to Linn, the government must take into account the current high vacancy rate and sweet land appetite when deciding on industrial land.
” And we observe that some enormous commercial buildings will be finished in the upcoming times, which indicates that the offer will increase.”
According to real estate consulting CBRE, Grade A office vacancy rates increased to an all-time high of 16.4 % in 2023, which caused a 6 % rent decline over the entire year.
Due to high financing costs, banks ‘ reluctance to lend, and economic uncertainties, CBRE reported that the total value of commercial property investment deals worth more than HK$ 77 million each also halved last year to$ HK$ 40 billion ( US$ 5.12 billion ), a 15-year low.
According to Jonathan Chau, executive director of CBRE Hong Kong, projected rate cuts will probably boost investor and business sentiment and lead to a treatment in deal flow in 2024.