Property market falls out of favor with most professional investors
Updated: 2011-12-07 07:24
By Li Tao(HK Edition)
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City's ranking in Asia Pacific plummets
Hong Kong's real estate market has fallen out of favor with most professional investors on bubble concerns. Its ranking on the region's most favored list has plummeted 10 spots to 14th place this year out of the 21 cities in the Asia Pacific region, according to a survey by Urban Land Institute (ULI) and PricewaterhouseCoopers.
Claiming the result was complied through interviewing over 360 international renowned real estate professionals including investors, developers and brokers, the report released on Tuesday shows that 36.5 percent of respondents believe it is now time to sell residential homes in Hong Kong, compared with 27.1 percent of interviewees who still see buying opportunities.
Similarly, one third of the respondents in the survey indicated "sell" for the city's office market versus the 17.5 percent of respondents who possess an opposite point of investment opinion.
Hong Kong's real estate market lost sheen to the investors as the city's property prices have skyrocketed and people see a limited room for profit, said Patrick Phillips, chief executive office of ULI.
"Hong Kong was the beneficiary of the economic crisis through 2008 and 2009, which still topped the favorites chart as it drew a lot of capital inflows at that time. But when the prices have driven up and yields are down, the 'full-price market' has become less attractive," said Phillips.
After gaining more than 70 percent since early 2009, the city's private home prices in have dropped over the past two months, falling by around 3 percent from the peak recorded in earlier 2011 to the lowest in more than six months, the city's largest real estate broker Centaline said in late November.
Average grade A office rents in the prime Central, including these AAA buildings, have also experienced its first quarter-on-quarter decline in two years, another report by Colliers International released in late October indicated. The weakened market sentiment amid lukewarm global economy has driven some landlords to revise down their rent expectations, CB Richard Ellis said last month.
It was the first time that Hong Kong dropped out of the most favorable top five among the property investors since the annual forecast for real estate investment in Asia Pacific cities debuted six years ago. The city retreated 10 places from last year's ranking of 4 in the region. Its major competitor in all rounds, Singapore, secured the top spot for the second consecutive year.
Phillips said Singapore's charm to investors could rest on the strong government controls on the property market even if the prices have also increased notably over the year.
If the government makes mistakes in decisions, Singapore could also fall off the top spot immediately, he added.
Shanghai, Sydney, Chongqing and Beijing rank second to the fifth in the chart this year. Mumbai and New Delhi, also in last year's top five, have both dropped out of the top ten this time, like Hong Kong.
Besides investment, Hong Kong's rating on development prospects also fell in the report, which stood at 15th place among the 21 cities surveyed in 2011.
litao@chinadailyhk.com
China Daily
(HK Edition 12/07/2011 page2)