HK property slump to continue amid falling demand

HONG KONG : Hong Kong is expected to see a 68 per cent jump in the number of homes ready to be sold in 2009.

However, with developers already being forced to slash prices, this is likely to put more pressure on property sales.

The economic downturn has triggered a price war among property developers in Hong Kong as they seek to speed up sales and attract buyers.

According to some real estate agencies, prices of units in the primary market have fallen by about 20 per cent. But it seems there may be even more competition ahead.

Data from the Rating and Valuation Department showed that the number of homes available for sale this year could jump by as much as 68 per cent.

14,740 units are expected to be completed, compared to 8,780 in 2008. That is likely to put even more pressure on the market, amid falling demand for new homes.

But some questioned whether the increase in ready-to-sell homes meant that developers are expecting an upturn in the market.

"I cannot comment, because the estimated figures present a view that we look at the completion at the end of last year. Most of the projects have commenced a few years ago. So I am not sure, and I don't think there's an exact tally with the economic upturn or downturn," said Tang Ping-Kwong, Acting Deputy Commissioner, Rating and Valuation Department.

For office space, the data showed a fall in demand. Office completions are expected to plunge to 140,000 square metres in 2009 - a 59 per cent drop on-year. This comes after two years of an abundant supply of private office space.

Office prices also lost momentum in the second half of the year. In the last quarter of 2008, Grade A office prices dropped 9 per cent, compared to a year ago.

However, despite the gloomy outlook for the property market, the government has said it will not cut prices for land sales.

One of the government's main sources of income, land revenue, has fallen way below expectations. Officials said it missed the target for the current financial year by 63 per cent, and the slump is expected to continue.

Source: Channel News Asia, 5 Mar 2009