Hong Kong is the most expensive housing sector in Asia, followed by Singapore. The fact that its market is at its healthiest best in 25 years, has been cited by the city's leading developer, Hang Lung Group Ltd.
According to Nikkei Asian Review, "The reason is land supply is finally coming to a normal [situation]," said Ronnie Chan Chi-chung, the chairman of Hong Kong-based company, on Thursday. "I don't think housing prices will fall precipitately, [nor] do I see prices rising crazily." He also said a 10-20% decline would be "no big deal" even though such a downturn would shake any other market's foundation.
His claims about a robust Hong Kong property scenario stems from the Chinese markets, especially the smaller ones, getting affected by rising home prices. He is optimistic about Chinese buyers gravitating towards Hong Kong as their market is currently headed towards a downturn, propelled by cheap credit and quick economic growth. One of the key focus of the Hong Kong developers would be to tap the Chinese luxury shopping center market.
Chan echoed this thought in his statement "There are not a lot of shopping centers in China that are good. Ninety nine percent of it is crap," as mentioned in IPE Real Estate.
The chairman's optimism and confidence come at a time when Hong Kong market is looking at a decline in its prices. Bloomberg reports that Asia's most expensive housing sector faced the biggest quarterly downfall in seven years, recording a 6.9% drop in the fourth quarter of 2015, according to Centaline Property Agency Ltd. Data. Additionally, sales in the private home market declined by 32% to $3.8 billion from the previous year.
The main problem arose when the average earners failed to secure a residential apartment due to highly unaffordable prices resulting from a shortage of properties. The leading city developer saw it as an opportunity to claim to come up with as many as 97,000 units over the next five years, which did not quite appease the analysts regarding the land demand-supply issue.
"Although the government should be able to meet the housing target up to 2019, there will be difficulties to ensure enough land for development beyond 2020," said David Ji, director and head of research and consultancy for greater China at Knight Frank.
Meanwhile, when the home price index did register a slight fall, the immediate reaction can be summed up in Dorothy Chow's words, who's the regional director of valuation advisory services at JLL - ""The Hong Kong residential market has softened recently. By acting soon, we could avoid the economy taking a hit if property prices drop dramatically."
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