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Epoch Times
26-05-2025
- Business
- Epoch Times
Sharp Drop in HIBOR Unlikely to Save Hong Kong's Real Estate Market Riddled With Structural Challenges: Experts
The one-month Hong Kong Interbank Offered Rate (HIBOR), which affects mortgage rates, hit a The rate change triggered discussion on whether Hong Kong housing prices could bottom out and rebound after having fallen nearly 30 percent from their peak over the past few years, as it will reduce mortgage interest rates, easing pressure on homeowners, which could lure funds to return to the local property market. Shih Wing-ching, chairperson of Hong Kong real estate agency Centaline Group, recently told local media that the agency expects the property market to bottom out and stabilize this year. Investment bank Goldman Sachs predicts that the decline in HIBOR will help increase residential property prices and reduce borrowing costs for developers. It has raised its house price forecasts for the city in 2026 and 2027 to 5 percent and 6 percent, respectively. The bank added that it expects it will take about 20 months to clear the current inventory in the private market of 28,000 unsold existing homes, and about 10 months to reach medium-term inventory levels. But other analysts believe that the decline in HIBOR will only be a short-term technical phenomenon, as the Hong Kong property market is still facing structural challenges that mean it is unlikely to benefit from the low-interest rate environment. Veteran banker Victor Ng Ming-tak refuted Shih's optimistic view on the 'Chaser News' program, believing that the sharp drop in HIBOR is more likely a short-term phenomenon under the current trade war. It is led by shippers rushing to focus on settling U.S. dollars and exchanging Hong Kong dollars before the Aug. 12 tariff negotiation deadline. This has seen excess funds injected into the banking system and pushing down HIBOR. Related Story 5/24/2025 But Ng said that this does not reflect increased demand for borrowing or investment. He also pointed out that it is no longer the case of 'Hong Kong people administering Hong Kong and enjoying a high degree of autonomy.' Hong Kong's attractiveness as an international financial center has declined, and Western capital is moving away from Hong Kong, he said. He believes that the 30 percent drop in housing prices is far from the bottom and that the current situation is a structural adjustment rather than a cyclical fluctuation. Foreign Capital Withdrawal and a Stagnant Economy The Hong Kong property market is facing pressure from all sides. On May 21, Hong Kong real estate giant New World Development Co. Ltd. sought to refinance a loan of HK$87.5 billion (about $11.2 billion). As one of the big four traditional real estate developers in Hong Kong, if New World defaults, it may have an impact on investor confidence and the bank's real estate loan portfolio. The company's revenue has declined for four consecutive years. In 2024, it recorded its first net loss in 20 years. In February 2025, it reported another net loss of HK$6.6 billion ($852 million). Its total debt reached HK$146 billion ($18.7 billion), and its cash reserves were only HK$22 billion ($2.8 billion). Local property tycoons such as Jacinto Tong, CEO of Gale Well Group Ltd., and 'Magnetic Tape King' Chan Ping-chi have successively sold properties to repay their debts, reflecting that real estate investors are facing financial pressure. Weaknesses in the retail and job markets further exacerbated housing market challenges. In 2025, the full closure of the Ocean Empire Food Shop chain led to about 100 employees being owed unpaid wages totaling about HK$15 million ($1.9 million). Other notable examples of closures include UNIQLO's Tsuen Wan store and Eggslut's Causeway Bay store after about two years of operation. Hang Seng Bank also recently announced layoffs, including about 1 percent of its core employees. Senior hedge fund manager Edward Chin Hong Kong's taxi trade is also facing a downturn. As of May 19, the urban taxi license market value has fallen to HK$2.18 million ($280,000), a drop of nearly 70 percent from the high of HK$7.23 million ($930,000) in 2013. Financial expert Simon Lee said in his 'Zhen Talk' program that Hong Kong's falling house prices leading to negative assets is not a problem itself; the fundamental problem lies in the city's deteriorating economic environment. The rising unemployment rate has made it difficult for homeowners to pay their mortgages, and some people have to rent out their properties at low prices or borrow money to get through the tough times, he said. If the economic downturn continues, the financial system will be impacted, he added. Greater Bay Area As Hong Kong's 'one country, two systems' advantage continues to erode, housing prices in Shenzhen, Guangzhou, and other places are also putting pressure on Hong Kong's housing prices. Chinese-language Epoch Times columnist Cai Zi pointed out that the traditional advantage of Hong Kong's 'land being as valuable as gold' is gradually disappearing. As Hong Kong's economy and policies are increasingly aligned with those of mainland China, in theory, the prices of financial assets will gradually converge with those of the mainland, he wrote. Coupled with the fact that Hong Kong's birth rate has fallen to a historic low, retired Hong Kong people are moving north into the mainland to buy property or settle down to cut living costs, further weakening Hong Kong's housing demand, he said. Even if the Hong Kong government is advocating the scheme of 'attracting talents,' professionals who come to Hong Kong to work and earn money for a few years will most likely return home to buy property. 'The same amount of money can easily buy two or three units when they return home,' Cai wrote.
Business Times
19-05-2025
- Business
- Business Times
Top Hong Kong builder sees weekend sales frenzy
[HONG KONG] Hong Kong's biggest property developer Sun Hung Kai Properties sold another 376 flats on Sunday (May 18) after receiving more than 34,000 bids, becoming one of the most sought after projects in months thanks to low interest rates. The new round of sales at Sun Hung Kai's Sierra Sea in the Ma On Shan area comes days after a quick sellout of its first batch earlier last week. The flats sold at about HK$9,645 (S$1,601) to HK$13,500 per square feet. A drop in interest rates is helping the city's residential market. The one-month Hong Kong Interbank Offered Rate, or Hibor, which often serves as a reference rate for mortgages, dipped below 1.3 per cent, the lowest since August 2022. 'The one-month Hibor's plunge could push mortgage rates further below residential rental yields and reignite investment interest in Hong Kong's housing market,' Bloomberg Intelligence analysts Patrick Wong and John Wong wrote in a note on Friday. They also expect monthly new-home sales in the Asia financial hub to jump by 36 per cent from 1,100 units in April. The company sold all 160 units in the 1B phase of the same residential development within hours on Wednesday. A NEWSLETTER FOR YOU Tuesday, 12 pm Property Insights Get an exclusive analysis of real estate and property news in Singapore and beyond. Sign Up Sign Up Home value for secondary transactions slightly edged up as borrowing costs lowered. Centaline Property Centa-City Leading Index, a gauge for second-hand home prices, climbed by about 0.26 per cent in the week to May 11. Any further advancement in the secondary market will depend on whether the US Federal Reserve cuts rates in June, said Willy Liu, chief executive officer of Ricacorp Properties. Lower interest rates are helping increase the chances of Hong Kong's residential property market bottoming out, according to Jefferies Financial Group. Justin Chiu, executive director of CK Asset Holdings, said Hong Kong's property market is at a 'turning point', and he expects property prices in the city to rise, according to an interview with local media on Monday. The city's home prices are 29 per cent below their peak in 2021, data from the government show. The number of households with negative equity – when the value of a property is less than the outstanding mortgage loan – rose to the highest since 2003 as at the end of March. BLOOMBERG
Business Times
19-05-2025
- Business
- Business Times
Top Hong Kong builder saw weekend sales frenzy
[HONG KONG] Hong Kong's biggest property developer Sun Hung Kai Properties sold another 376 flats on Sunday (May 18) after receiving more than 34,000 bids, becoming one of the most sought after projects in months thanks to low interest rates. The new round of sales at Sun Hung Kai's Sierra Sea in the Ma On Shan area comes days after a quick sellout of its first batch earlier last week. The flats sold at about HK$9,645 (S$1,601) to HK$13,500 per square feet. A drop in interest rates is helping the city's residential market. The one-month Hong Kong Interbank Offered Rate, or Hibor, which often serves as a reference rate for mortgages, dipped below 1.3 per cent, the lowest since August 2022. 'The one-month Hibor's plunge could push mortgage rates further below residential rental yields and reignite investment interest in Hong Kong's housing market,' Bloomberg Intelligence analysts Patrick Wong and John Wong wrote in a note on Friday. They also expect monthly new-home sales in the Asia financial hub to jump by 36 per cent from 1,100 units in April. The company sold all 160 units in the 1B phase of the same residential development within hours on Wednesday. A NEWSLETTER FOR YOU Tuesday, 12 pm Property Insights Get an exclusive analysis of real estate and property news in Singapore and beyond. Sign Up Sign Up Home value for secondary transactions slightly edged up as borrowing costs lowered. Centaline Property Centa-City Leading Index, a gauge for second-hand home prices, climbed by about 0.26 per cent in the week to May 11. Any further advancement in the secondary market will depend on whether the US Federal Reserve cuts rates in June, said Willy Liu, chief executive officer of Ricacorp Properties. Lower interest rates are helping increase the chances of Hong Kong's residential property market bottoming out, according to Jefferies Financial Group. Justin Chiu, executive director of CK Asset Holdings, said Hong Kong's property market is at a 'turning point', and he expects property prices in the city to rise, according to an interview with local media on Monday. The city's home prices are 29 per cent below their peak in 2021, data from the government show. The number of households with negative equity – when the value of a property is less than the outstanding mortgage loan – rose to the highest since 2003 as at the end of March. BLOOMBERG
Business Times
09-05-2025
- Business
- Business Times
Hong Kong property prices may bottom as borrowing costs plunge: Jefferies
[HONG KONG] Declining interest rates in Hong Kong are increasing the chances the residential property market bottoms out, according to Jefferies, an investment banking and capital markets firm. The one-month Hong Kong Interbank Offered Rate has plunged 205 basis points in the past four days, potentially bringing relief for a market hammered by high interest rates and slumping prices. Money markets are flushed after the monetary authority sold US$16.6 billion of local currency to stop it from strengthening past its pegged range. 'If the currency cannot appreciate, the upward pressure goes on local asset prices,' Christopher Wood, Jefferies' global head of equity strategy, said in a note Thursday (May 8). 'This has increased the odds that Hong Kong residential property may be on the point of bottoming.' A gauge of home prices from Hong Kong property firm Centaline has dropped about 29 per cent from a peak in August 2021. The number of households in negative equity, meaning their properties are worth less than the loans they took out for the purchase, is the highest since 2003 as of the end of March. The dollar has weakened against most Asian currencies since the US introduced tariffs as investors weigh the risks of the world's largest economy going into recession. To be sure, a gauge of the dollar is up 0.4 per cent this week on hopes of trade deals. While lower Hibor, which serves as a reference rate for mortgages, may ease funding cost pressures for developers and landlords, it could also squeeze profit margins for local banks, according to a separate note by Jefferies analysts Sam Wong and Shujin Chen. 'Hong Kong banks are likely fairly close to, if not already at, an earnings inflection point,' they said. 'Net interest margin pressure persists and non-interest income momentum could fade toward the end of the second quarter and second half of 2025.' BLOOMBERG
Business Times
09-05-2025
- Business
- Business Times
Hong Kong property prices may bottom as borrowing costs plunge
[HONG KONG] Declining interest rates in Hong Kong are increasing the chances the residential property market bottoms out, according to Jefferies, an investment banking and capital markets firm. The one-month Hong Kong Interbank Offered Rate has plunged 205 basis points in the past four days, potentially bringing relief for a market hammered by high interest rates and slumping prices. Money markets are flushed after the monetary authority sold US$16.6 billion of local currency to stop it from strengthening past its pegged range. 'If the currency cannot appreciate, the upward pressure goes on local asset prices,' Christopher Wood, Jefferies' global head of equity strategy, said in a note Thursday (May 8). 'This has increased the odds that Hong Kong residential property may be on the point of bottoming.' A gauge of home prices from Hong Kong property firm Centaline has dropped about 29 per cent from a peak in August 2021. The number of households in negative equity, meaning their properties are worth less than the loans they took out for the purchase, is the highest since 2003 as of the end of March. The dollar has weakened against most Asian currencies since the US introduced tariffs as investors weigh the risks of the world's largest economy going into recession. To be sure, a gauge of the dollar is up 0.4 per cent this week on hopes of trade deals. While lower Hibor, which serves as a reference rate for mortgages, may ease funding cost pressures for developers and landlords, it could also squeeze profit margins for local banks, according to a separate note by Jefferies analysts Sam Wong and Shujin Chen. 'Hong Kong banks are likely fairly close to, if not already at, an earnings inflection point,' they said. 'Net interest margin pressure persists and non-interest income momentum could fade toward the end of the second quarter and second half of 2025.' BLOOMBERG
