Property Futures

Real Estate News, Reviews and Investment

Hong Kong capitalizes on improving economic conditions

News: Hong Kong measures to boost floor space.

The announcement by the chief executive of Hong Kong was made against a backdrop of high floor-space sales and demand that was outstripping supply.

The announcement was received with enthusiasm by private developers as well as a note of caution from Thomas Lam, director of research for Knight Frank Greater China.


The business environment at the time of the announcement

Like all the other real estate markets in Asia, Hong Kong also applied restraining measures during the period of escalating real-estate prices due to contracting economic conditions.  With improving conditions, such measures were no longer needed and jump-starting the local economy seemed the correct path to follow.

Two prevailing economic conditions

On the eve of the announcement about direct government involvement in increasing the supply of private and public housing, 2 economic conditions were prevalent:

  • The transactions across the board for the two sectors was up 65.2%
  • Transactions for luxury homes worth HK$10 million was up 57.7%.


These conditions were conducive in setting the tone for increasing floor space.

Reactions to increasing supply of floor space

There were mixed feelings of uncertainty and confidence. In responding to the announcement, Mr. Lam pointed out that:

  • Demand will continue to outstrip supply forcing government to stabilize prices with only a fluctuation of 5% upwards or downwards.
  • After an expected slowing down in sales of residential homes in January, resurgence must inevitably take place in February, when the effects of cooling measures have subsided.
  • Generally speaking, private developers have been confident in the performance of the economy with many expecting to re-launch unsold projects and others focusing on newly released primary projects. At the same time secondary sales have also recorded very high prices.

Regardless of what impact the statement may have had on business sentiments, there is an underlying confidence that Hong Kong will again revert back to its former vibrant real estate status it enjoyed in the past.


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