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Property News Weekly Digest
〈China Daily, December 14, 2019〉Hong Kong's Grade-A office market looks set to plunge by between 15 and 20 percent in 2020 on the back of the city's protracted social unrest, a slowing global economy and the lingering Sino-US trade tensions, predicts real-estate service provider Jones Lang LaSalle.

Alex Barnes, head of markets at JLL in Hong Kong, said he expects the vacancy rate for top-tier offices in key urban areas to climb as leasing demand continues to weaken.

'Decentralization for more cost-effective options will remain a major trend next year as tenants control real-estate costs in uncertain times,' he said.

'Central will experience the greatest downward pressure as there's a significant rental gap between Central and other office submarkets.'

Barnes and two other JLL executives made their predictions in Hong Kong on Thursday with regard to the company's year-end property market review and forecasts.

JLL believes the longest bull run in Hong Kong's property market history had ended in the second half of this year, and the city's Grade-A offices are already in a downward cycle.

〈Global Times, December 13, 2019〉While it is challenged in Hong Kong, the “one country, two systems” principle prospers in China’s other special administrative region (SAR), Macao, a city that enjoys political stability, rule of law, and has seen remarkable development and orderly integration into China’s system.

After 20 years of development following its return to China, Macao has been more confident with bright prospects. The Chinese central government has been seeking to develop the city as a bridge that links China and the West in terms of economy, trade and culture. China is also committed to the policy for the Macao people to govern Macao, with patriots playing the principal role.

Thanks to that, the society in Macao has aligned its local perspectives and interests with those of the Chinese mainland, and is proactive to be part of the Guangdong-Hong Kong- Macao Greater Bay Area and the China-proposed Belt and Road Initiative (BRI). The city has thus become a unique and important source for the great rejuvenation of the Chinese nation.

Macao’s success stems from the “one country, two systems” principle. When Macao just returned to China, its security and economy were in a bad shape. That image has totally changed as the city is comprehensively supported by the central government in policies and is enjoying a high degree of autonomy, which is ensured by the Macao Basic Law, including independence in formulating its own policy to develop the local entertainment and recreation industry.

〈Asian Post, December 12, 2019〉Luxury property prices in Hong Kong will decline by up to 20 per cent next year after falling 4.7 per cent this year, as Beijing continues to maintain capital controls and the mainland economy feels the impact from the US-China trade war, according to property consultancy JLL.

"The economic slowdown in mainland China and Hong Kong will dampen housing demand, particularly in the luxury residential market that relies on demand from mainland China," said Joseph Tsang, chairman of JLL.

Knight Frank, however, expects high-end prices to fall only 5 per cent in 2020 and transaction volumes to remain low.

"Luxury homes on The Peak, Mid-Levels and Island South are rare products like antiques. These rich owners have holding power and may offer 5 per cent discounts but are unlikely to slash prices significantly," said Thomas Lam, executive director of Knight Frank.

Meanwhile, JLL expects mass residential property prices to fall 10 per cent to 15 per cent next year, after slipping 2.5 per cent in the second half of this year.

Tsang said the biggest factor likely to weigh on the mass property market was unemployment.

"The social unrest has actually resulted in quite serious damage to retail, tourism and hotels. And all these trades roughly add up to about 15 per cent of our working population of 4 million. That's about 600,000 being affected," Tsang said.

〈Global Times, December 11, 2019〉There is little evidence so far that the social unrest in Hong Kong has adversely affected its role as a global financial centre, even amid severe short-term economic pressures, according to Fitch Ratings.Hong Kong, Dec 13 (ANI): There is little evidence so far that the social unrest in Hong Kong has adversely affected its role as a global financial centre, even amid severe short-term economic pressures, according to Fitch Ratings.

However, continued turmoil is undermining perceptions of Hong Kong as a stable international business hub as well as the effectiveness of its governance, trends consistent with its negative outlook on Hong Kong's AA rating.

Hong Kong's short-term economic outlook continues to deteriorate. Fitch now expects the economy to shrink by 1.5 per cent in 2019 with tourism, retail, hotels and catering, and air transport among the sectors most severely hit.

Meanwhile, real estate transaction volumes have dropped sharply and residential property prices are down roughly 5 per cent from their May 2019 peak.

Growth in 2020 could improve slightly supported by the 25 billion Hong Kong dollars of fiscal relief measures (0.9 per cent of GDP) announced since mid-August, but the economic outlook remains vulnerable to lingering social unrest.

〈Shanghai Daily, December 11, 2019〉Shanghai attracts overseas investment in real estate
Shanghai became the largest recipient of cross-border real estate capital among Asian-Pacific cities in the first three quarters of this year, and the world’s third-largest destination for cross-border investment after Paris and London, international property consultancy JLL said in a report released yesterday.

Despite uncertainties over trade friction between China and the US, overseas investors spent a record US$5.9 billion in Shanghai’s commercial real estate during the first nine months of 2019, a surge of 235 percent from the same period a year earlier, JLL said.

“Shanghai’s real estate market remains one of the most dynamic in the world with a proven ability to effectively embrace changes in technology, absorb rapid economic growth and improve global connectivity,” said Jeremy Kelly, JLL’s global research director. “The city’s rise as an investment destination has been rapid.”

By the end of the third quarter of 2018, Shanghai ranked as the world’s seventh-largest city recipient of cross-border real estate investments, and within 12 months, it jumped four places to beat mainstays like New York and Hong Kong.

〈China Daily, December 10, 2019〉An estimated 7,000 Hong Kong licensed retailers out of 64,000 may have to shutter in the next six months due to the social unrest that has rocked the city since June, according to a survey by the city's main retail association on Monday.

The grim situation may also create severe unemployment, with over 5,600 employees likely to be laid off at that time if the situation does not improve or if government relief measures are insufficient, the Hong Kong Retail Management Association said.

The announcement followed the association's survey in October and November of 176 licensed retail establishments covering 4,310 shops.

HKRMA Chairwoman Annie Tse Yau On-yee said that the city's retail sales are the worst in history, and the retail sales value in December is not necessarily better than that of October.

October saw retail sales value plummet by 24.3 percent year-on-year, widening from a loss of 18.3 percent in September and 23 percent in August. Meanwhile, tourist arrivals were down 43.7 percent from October 2018.