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The Indian Summer of property market dominates prices to rise or fall in coming year
2024-12-24
As the new year is coming, the government's fiscal deficit continues to remain high at over HK$ 100 billion as from land revenue has dropped significantly. This year of the land revenue has decreased 80% to HK$ 4 billion from HK$ 19.6 billion last year. If compared to land revenue of HK$ 143 billion in 2021 years, it has increased by 97%. This astonishing plunge in figures showed why the fiscal deficit remains high.
Land revenue has been declining. At the same time, the land prices of the three plots of land sold this year revealed the tendency of declining. The land price of a Tung Chung residential site recently was acquired by Nan Fung at HK$ 1,022 per square foot (psf), which was 57% lower than the residential site in Siu Lek Yuen purchased by Chinachem at HK$ 2,357 psf in October this year.  If compared to the Shatin residential site purchased by Sun Hung Kai Properties at HK$ 3,952 psf in July this year, it declined by 74%.
If land revenue for this year reached HK$ 143 billion three years ago, the fiscal deficit can be reduced by 70%. As the current land price of psf has dropped to the HK $1,000 level, the land price of psf in remote Northern Metropolis that will be available for tender in the future will drop to below HK $300. Therefore, it will be difficult for the government to increase fiscal revenue by relying on the proceeds from land revenue.
Donald Trump will take office on the ninth day before the Lunar New Year (January 20th). If he does not impose tariffs on China imported products as announced earlier, the real estate market will have a small-scale rebound after the Lunar New Years holidays. If this is not the case, the US really takes punitive actions against China imported products or enterprises of Hong Kong. This is the worst scenario, and the property market will immediately march into the eternal back hole.
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1. New home inventory is expected to balance in 25 2024-12-24 19:49:54 |
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New home inventory is expected to balance by late 2025, as the months of housing supply dropped from its peak at 101.6 months, according to JLL. In a report, JLL said if primary market transaction volumes normalize to 18,000 units annually, months of supply could decline further to 58.0 months by December, nearing levels seen in 2021. Although current inventory levels remain high, with unsold units in completed projects and ongoing constructions, forward-looking supply indicators suggest improvement. |
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2. Converting distressed hotels into student hse 2024-12-24 21:39:49 |
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The emerging trend of converting underperforming or distressed hotels into student housing in Hong Kong presents a growing investment opportunity, Knight Frank said. Knight Frank noted this shift is driven by the significant shortfall in student accommodation and the growing demand for affordable living spaces among non-local students. It also reported a sharp increase in the non-local student population, fuelled by Hong Kong’s initiatives to promote international education. For example, the admission quota for non-local undergraduates at UGC-funded universities has risen from 20% to 40%. In 2023 alone, 62,079 student visa applications were approved, but only 35,720 on-campus beds were available, leaving a gap of 23,389 beds. |
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