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Real Estate Situation

Hong Kong financial centre status withered

 

Damon Ho

19th November 2022

As the third largest financial centre in the world, Hong Kong’s economy is benefited by the huge amount of Foreign direct investment. Unfortunately, the situation is different from before. The fundraising ability of the Hong Kong stock exchange had been decreasing from number one to ninth position in past three years. The sliding of the economy of Hong Kong devastates the of various industries. If the Government does not implement the remedy policies to save the pillar property industry, the adverse effects are harmful to the whole society.

 

The stricken quarantine policy has been limiting the free entry of the business travellers for the last three years. In addition, the local foreign companies are also hard hit by this policy, and they may choose to leave Hong Kong. The key role of the super-agent of Hong Kong is to attract the foreign direct investment and supplies the consulting services to the international companies to entry China. If this role is not sustainable, Hong Kong will lose its competitive advantages as its financial centre status.

 

It is essential to implement the open-door policy for foreign investors at once. The timing is critical, and the further delay will do immense harm to the whole society. As the competitive opponent, Singapore has been reopened the free entry policy and excludes all the troublesome added regulations to deter the global travellers. Unlike Singapore, Hong Kong’s foreign companies have reduced the human resources investment and transferred the partial positions to Singapore at the same time.

 

In fact, Hong Kong has been serving China as the offshore financial centre for Renminbi exchange trading for a long time. Until recently, this trend is significant changed and Singapore is growing in mass amount for Renminbi exchange trading. If Hong Kong do nothing to counter this trend, the financial centre status will fade out day by day.

The stock and property market have compensated each other. When the stock market is prosperous, the spill over effect of the wealthy will help the property market or it is vice versa. The number of fundraising companies are rising, and the stocking market is growing at the same time. If this function is not working well, these companies have a limited space to develop, and the business will be withered. As a result, the property market will also suffer the deteriorating business environment.

 

Although the stock market is bottoming up recently, but the major falling trend is consistent. Under this worsening business environment, the property agency industry withstands the hard hit of this wave and the business in the red is inevitable. It is no doubt to cut in half or more of their staffs which is the only way out the jeopardized industry. If the falling property price is not halted, the foreclosed residential units will raise to the historical record eventually. If this trend keeps going on, Hong Kong will fall into the abyss forever.

Hong Kong stands at the crossroads, and the fallen financial industry is clear to see. If the remedy policies are not to adopt as soon as possible, Hong Kong will be submerged in the raging torrent of this historical moment.

 
 
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1. NextGens keen to set up new business 2022-11-19 16:32:20

Over 20% of Hong Kong and Mainland Chinese NextGens are keen to have more of a business mindset outside of their family business, PwC said in its report.

This as 28% of Mainland China NextGens and 20% of Hong Kong Next Gens are more likely to establish their own entrepreneurial venture outside of family businesses. These are higher than the global average of 12%.

Currently, 54% of NextGens are involved in leadership roles in Hong Kong. 

Business survival is also top priority for Chinese NextGens in the next two years, followed by adopting new technologies.

2. 新加坡擊敗香港成三甲 2022-11-19 16:50:17

新加坡擊敗香港,在《全球金融中心指數》報告全球排名第三,香港跌一級,排名第四,美國紐約繼續排首位,第二位是英國倫敦。

《全球金融中心指數》報告評估119個金融中心,香港的整體評分有725分,但較3月份的上一期公布,排名跌一級。

3. Chinese authorities rescue property sector 2022-11-19 20:42:37

Chinese authorities have unveiled sweeping measures to rescue the struggling property sector, as regulators seek to offset years of harsh pandemic curbs and a real estate crackdown that have stalled the world’s No 2 economy.

The banking regulator and central bank issued a 16-point set of internal directives to promote the “stable and healthy development” of the industry.

The measures include credit support for debt-laden housing developers, financial support to ensure completion and handover of projects to homeowners, and assistance for deferred-payment loans for homebuyers.

4. Born in the wrong time 2022-11-20 17:43:28

Property agents in Hong Kong are resorting to increasingly wry advertising slogans to attract potential buyers during the city’s worst housing slump in years.  

“Born in the Wrong Time,” “No Tears Left to Cry,” “The Cut Is Deep, The Love Is Real” — these are just some of the catch lines being used on home listing ads, underscoring the desperation of agents and owners. On one level it’s worked: Social-media sites are now flooded with these over-the-top descriptions. But sellers are still finding it hard to offload properties. 

Rising interest rates are weighing on a property market that has already been battered by a population exodus and Covid curbs. Hong Kong’s one-month rate, known as Hibor, has increased to the highest level since 2008 due to the city’s currency peg with the greenback. Expensive borrowing costs coupled with an economic contraction have made would-be buyers cautious.  

The number of unsold new homes in Hong Kong increased to the highest in more than 15 years in the third quarter. Even the city’s powerful developers may need to offer discounts to sell vacant units, according to Bloomberg Intelligence.  

5. Exports decreased 15% 2022-11-21 10:27:52

The volume of exports of goods in Hong Kong decreased 15.3% whilst imports also declined 14% in September 2022 from figures in September 2021, the  Census and Statistics Department (C&SD) said.

In a statement, C&SD said comparing the nine months of 2022 with the same period last year, the volume of total exports and imports also went down by 11% and 10.6%, respectively.

When compared to the third quarter of 2022 from the previous quarter on a seasonally adjusted basis, the volume of exports and imports fell by 8.7% and 11%, respectively.

7. Rescue package salvaging property market 2022-11-21 19:40:21

China’s sweeping rescue package to salvage its real estate market is detailed in a 16-point playbook for finance officials across the country.

The initiatives range from addressing the liquidity crisis faced by developers and a “temporary” easing of a signature restriction on bank lending, according to people familiar with the matter. It marks all-round efforts to bail out the real estate market, which central bank Governor Yi Gang said he hope would have a “soft landing” after recent data showed improvement.

8. CPI rose to 4.4% 2022-11-22 10:34:56

The consumer price index (CPI)grew by 1.8% in October 2022 but it is still smaller than the 4.4% recorded in September 2022, the Census and Statistics Department (C&SD) released.

According to its figures, the larger increase in September was attributed to the waiver of public housing rentals.

Without effects of the government's one-off relief measures, the year-on-year increase of composite CPI in October 2022 was 1.7%, slightly lower than the increase in September 2022 with 1.8%.

9. Australia Jobless rate record low 2022-11-22 21:36:40

Australia's jobless rate unexpectedly fell in October as a surge in full-time employment underpinned strong hiring, reinforcing the Reserve Bank's arguments for further interest-rate increases.

The unemployment rate slid to 3.4 percent - the lowest level since 1974 - from 3.5 percent a month earlier, data showed. Employment advanced by 32,200 people in October, more than double the forecast 15,000 increase.

10. Hk retail rents plummeted 2022-11-23 13:58:56

Hong Kong no longer has the world’s most-expensive retail district after rents plummeted due to Covid curbs and restrictions on visitors. 

Manhattan’s Upper Fifth Avenue is now the priciest street globally for shopping, according to a survey by commercial property firm Cushman & Wakefield Plc. Hong Kong’s Tsim Sha Tsui district comes second, followed by Italy’s Via Montenapoleone in Milan. The previously annual survey is the first since 2019. 

Annual rents for Upper Fifth Avenue shops averaged US$2,000 per square foot, up 14 percent from pre-pandemic levels, according to the report. Rents in Tsim Sha Tsui in Kowloon fell 41 percent to US$1,436 per square foot in the period, while those in Via Montenapoleone rose 9 percent to US$1,380

11. no need to adjust spicyeasures 2022-11-24 00:03:43

The Secretary for Financial Services and the Treasury said today that the government will maintain healthy and stable development of the residential property market, claiming no need to adjust the "spicy measures" - the government’s measures to stabilize the property market.  

In the Legislative Council on Wednesday, Secretary Christopher Hui Ching-yu said the government considered a promising outlook in Hong Kong’s property market by taking into account multiple factors, including the speed and range of property price changes, the transaction volume of residential properties, future supplies, and market sentiments.

“We do not consider it necessary to adjust the measures to monitor the demands for residential properties under the current environment,” Hui said.

12. Benchmark rate hiking 2022-11-24 12:12:13

That is the eighth consecutive hike since December 2021, pushing the rate to its highest level for 14 years.

It also marks the biggest single increase since 1989, and could have a big impact on the cost of living and people's finances.

13. Central shop rents falling 2022-11-24 14:32:00

A duplex in Central was leased recently to a restaurateur for HK$90,000 a month, 31 percent or HK$42,000 lower than the previous rent fetched and a fall to the rental level of 13 years ago.

The duplex is made up of shop 1 on the ground floor and shop 101 on the first floor of Welley Building at 97 Wellington Street, Central, and offers a gross floor area of about 1,050 sq ft and translates on a per-square-foot basis to about HK$85.

The landlord started offering the shop for lease in August and was asking for HK$120,000 until early last month, when the price was cut to HK$90,000, which immediately attracted many prospective tenants.

14. 香港美資公司流失嚴重 2022-11-24 20:38:07

政府統計處公佈《2022年有香港境外母公司的駐港公司按年統計調查》,結果發現以香港為地區總部的境外公司跌至1411間,較3年前少130間,當中美資成流失重災區。

調查以今年6月1日為數據,母公司在境外的駐港公司數目為8,978間,亦為近4年來首次跌穿9,000間,比去年少71間;當中今年以香港為地區總部的境外公司共1,411間,較去年少3%或46間,為連續三年下跌,較2019年統計時累減8%或130間。

15. EU rush to buy Russian diesel fuel 2022-11-25 13:45:06

Before the start of a European Union (EU) ban in February, European traders are rushing to fill tanks in the region with Russian diesel fuel, as alternative sources remain limited.

After a ban on Russian crude takes effect in December, EU will ban Russian oil product imports from 5th February.

Refinitiv data showed that, with few immediate cost-effective alternatives, diesel from Russia accounted for 44 percent of Europe's total imports of diesel so far in November, compared with 39 percent in October.

While Europe's reliance on Russian diesel has fallen from more than 50 percent before Moscow's February invasion of Ukraine, Russia is still the largest diesel supplier to the continent.