Rosalind Evans
The Asian real estate market, particularly in Hong Kong, is experiencing significant fluctuations. As property prices in Hong Kong have plummeted by nearly 20% from their peak, potential buyers and investors are being offered a mix of challenges and opportunities. Real estate experts Peter Churchouse, chairman and managing director of Portwood Capital, and Jeff Yau, a Hong Kong property analyst at DBS Hong Kong, provide valuable insights for those considering entering this volatile market.
Real Estate Insights
Peter Churchouse highlights a crucial difference between homeowners and investors in the current market. The significant drop in Hong Kong’s property prices presents a favourable buying opportunity for homeowners. Churchouse advises, “Prices down this much is probably not a bad time to look to be buying,” provided buyers can manage the mortgage and down payment. However, he warns that there are still downside risks, though the worst may be over.
The situation for investors, however, is markedly different. Churchouse suggests that investors seeking high rental yields should focus on Australia and New Zealand, where yields are notably higher, ranging between 6-8%. In contrast, Hong Kong’s rental yield is currently below 3%, with mortgage rates exceeding 4.1%, leading to a negative rental carry.
Jeff Yau predicts a further 10% drop in Hong Kong property prices in 2024, despite the Hong Kong government’s recent efforts to boost the market by cutting stamp duties. However, Henry Chin, Asia-Pacific’s head of research at CBRE, cautions that the high cost of financing could continue to deter potential homeowners.
Churchouse also points out the ease of buying property in Hong Kong and Japan compared to other regions in Asia, where legal difficulties and restrictions on foreign ownership are prevalent.
Navigating the Asian property market, especially in Hong Kong, requires a nuanced understanding of the current economic landscape. While homeowners may find favourable conditions for purchasing property, investors should cautiously assess their options, considering other regions like Australia, New Zealand, and Japan for better returns. Staying informed and seeking expert advice will be vital to making sound investment decisions as the market evolves.
