DBS Hong Kong: There is no urgent need to "remove the hotness" and there is still a risk of losing bids for tens of billions of commercial land

Executive director of the DBS Hong Kong research department, Yau Cheuk-man, said today (20th) that the impact of customs clearance between Hong Kong and the mainland on the property market still needs time to reflect. It is expected that property prices in Hong Kong will remain stable this year, and the best interest rate is expected to rise to about 6%. It will also rise to nearly 4%.

Qiu Zhuowen pointed out that the current number of mainland immigrants is 20% of that before the epidemic, and the support effect on the property market has not yet been reflected.

As for the recent improvement in market conditions, it is not because mainlanders have entered the market, but because local buyers have "turned around".

Qiu Zhuowen also pointed out that there are still uncertainties in the property market this year. Last year, first-hand transactions fell by 40%, and the number of units that have been launched but not sold reached 18,000, a record high since the first half of 2004. It will take some time for the market to digest, but It is believed that as long as developers are not in a hurry to raise prices, the market will still be able to absorb them.

He also said that as the market stabilized, there was no urgent need for the government to "remove the heat" on the property market.

The residential project above the Siu Ho Wan depot, which was closed earlier, was finally rejected.

(File photo/photo by Li Zetong)

There is still a risk of losing bids for land with a valuation of over 10 billion yuan

In terms of the office market, Yau Chew Man said that there is currently a large supply of office buildings, coupled with the unstable external economic environment, the pre-lease rate of the new commercial buildings in Central, which will be completed, is still at a low level. It is estimated that the vacancy rate of Central office buildings may rise above 9%. Rents will fall another 5%.

As for the three recent land bids, Qiu Zhuowen said that this year’s large-scale land with a valuation of more than 10 billion yuan still has the risk of losing bids, and the development period is longer and the risk of losing bids for commercial projects is higher.

In addition, when asked about Link REIT (0823)'s recent rights issue to raise funds, will developers with higher debt follow suit?

Qiu Zhuowen believes that developers have other means to reduce debt, and they should not use rights issues to raise funds at present.

Yau Cheuk Man, Executive Director, Research, DBS Hong Kong.

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