The protracted protests with the US-China trade war make the Hong Kong real estate market difficult. Reduced supply makes Hong Kong real estate depreciate but still sluggish, according to SCMP.
Sammy Po, managing director of the residential division at Midland Realty, Hong Kong, said the state of Hong Kong has seen a sharp decline in prices and real estate transactions in Hong Kong. Some homeowners are willing to discount at least 10% in hopes of finding buyers quickly.
This person informed that when transactions fell, the real estate would be subject to fierce competition. This inadvertently results in approximately 20% of dealers in the city being forced to close.
“There are about 40,000 agents. We estimate there will be a total of about 4,000 to 5,000 transactions per month, which means that about 10 agents will have to compete for each transaction every month”, Mr. Po said.
Meanwhile, Mr. Wong, president of Midland Holdings, said that the secondary market will be hardest hit. This year is expected to have only 40,000 secondary transactions, marking the lowest level since 1996.
The number of secondary transactions was assessed to be even lower than in 2003, when Hong Kong faced Sars (severe acute respiratory syndrome). Mr. Wong said the possibility of secondary trading will decrease by 13% this year.
Midland said 4,072 properties for sale have been adjusted to reduce the selling price, up 58.6% compared to June 1. Its 6-month profit after tax also dropped 37.8% to Hong Kong $93.6 million ($11.93 million), as rental costs were higher but commissions were reduced due to intense competition.
The worst-case scenario offered by DBS Bank is that real estate prices could fall by 20% to 30% next year if tensions continue. Daniel Wong, chief executive at Midland IC & I, the agency affiliated with Midland Holdings, said other segments of the real estate market would also be affected.
In the worst-case scenario, the price of office buildings and shopping centers may drop by 30% by the end of 2020, while the price of industrial real estate may fall by 20%.
Midland IC & I announced profits for the first six months of the year fell 58% to Hong Kong $ 20.97 million. “The number of transactions of industrial, office and retail real estate this year can be reduced by 40% compared to last year to 5,200, marking the lowest level in history”, Mr. Wang said.
According to Centaline Group, in another development, an investor lost 14.4% when selling parking at Kingswood Villas in Tin Shui Wai. He bought it for 1.33 million dollars less than 4 months ago, but now only sells for 1.14 million dollars.