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Property News Weekly Digest
〈Asian Post, April 18, 2020〉Negative equity risk 'not like it was in 2003'
Financial chief says property market correction will be smaller than after Sars, with stronger fundamentals now and speculation under control

Hong Kong will be spared the wave of mortgage borrowers driven into negative equity that peaked during the last major health crisis in 2003, the finance chief says, pointing to stronger fundamentals in the world's most expensive property market despite buffeting by the coronavirus pandemic.

Authorities saw no need for a big course correction to the real estate market, although banks might be encouraged to be "more accommodative" with new owners facing payments, Financial Secretary Paul Chan Mo-po told the Post.

The government would also continue to release land for office development at a steady rate, even as prices came under pressure, to better meet demand.

"The drop in the market has been in order, and we are not under a big economic bubble," Chan said.

The pandemic has delivered a blow to Hong Kong's property sector along with the rest of the economy, pushing down prices over the past two months and leaving transactions at a fraction the usual number as nervous buyers wait out the crisis.

〈Asian Post, April 17, 2020〉OVER 1,000 buyers of flats hit by price drop
Homeowners in some key housing estates face negative equity as loans exceed market values, with prices declining by more than 10 per cent

More than 1,000 homebuyers were on the verge of falling into negative equity, after the prices of flats in some housing estates fell more than 10 per cent from October last year, industry insiders said.

Negative equity occurs when a home loan exceeds the market value of the property involved.

The last time the city recorded more than 1,000 such cases was in the second quarter of 2016, when it reported 1,307 instances of negative equity.

There were 128 cases of negative equity in the three months ended December 31, according to Hong Kong Monetary Authority (HKMA) data.

This means the level could have risen by 680 per cent by the time the authority releases data for the first quarter by the end of this month.

"The number of negative equity [homeowners] might have risen above 1,000 in the first quarter," said Ivy Wong, managing director of Centaline Mortgage Broker.

〈The Standard, April 16, 2020〉HK residential rents continue to slide
Rents in Pak Shek Kok are under downward pressure, as the monthly rent of a 1,348-square-foot flat at Providence Bay only costs HK$26,000 or HK$19.3 per sq ft, according to Centaline Property Agency.

In Tai Po, a 258-sq-ft flat at Solaria was leased for HK$9,000 per month or HK$ 34.9 per sq ft, while in Sha Tin, a two-bedroom flat at City One Shatin was rented for HK$9,800 per month, or HK$32.2 per sq ft, after HK$1,200 was cut from the original asking rent.

Meanwhile, Michael Chan Yue-kwong, former chairman of Cafe de Coral (0341), bought a luxury house at Jade Grove in Tuen Mun for HK$31.88 million from Chinachem Group as a first-time homebuyer.

OCBC Wing Hang Bank expects Hong Kong's property price will fall by 15 percent year-on-year in 2020, with the local economy estimated to shrink 2.1 percent from the year before.

In the commercial property market, property consultancy Colliers International expects Grade A office rents to fall by 14 percent year-on-year in 2020.

〈The Standard, April 15, 2020〉Market perks up over housebound Easter
The property market heated up again over the Easter weekend with pent up demand, as Centaline Property Agency reported 27 secondary transactions at the ten major housing estates.

The travel restrictions and group gathering ban have stimulated home viewings and transactions in the secondary market over the four-day weekend, Hong Kong Property Services chief executive Richard Lee Chi-shing said.

In Ap Lei Chau, a 536-sq-ft flat at South Horizons changed hands for HK$7.98 million, or HK$14,888 per sq ft, after HK$520,000 was cut from the initial asking price, according to Centaline Property Agency.

In Tin Shui Wai, a 441-sq-ft flat at Kingswood Villas fetched HK$4.76 million, or HK$10,812 per sq ft, after about HK$332,000 was slashed from the first asking price.

And in Tsing Yi, a 666-sq ft flat at Villa Esplanada sold for HK$11.33 million, or HK$17,012 per sq ft, after HK$2.17 million was rubbed off the initial asking price.

〈Japan Times, April 14, 2020〉Hong Kong investors are becoming more willing to take a risk on Japanese property even as the Covid-19 pandemic and the postponement of the Tokyo Olympics dampen sentiment in the world's third-largest economy.

Shop prices in prime locations in Tokyo and Osaka that had held firm for more than a decade had fallen by nearly 30 per cent, making them attractive propositions, investors said.

"I just started investing in Japan about two years ago," said Polly Lo, who owns a portfolio of shops, hotel rooms and flats in Japan, Thailand, Dubai, Malaysia, Australia and Britain. "Now, I'm looking for bargains in Osaka or Tokyo as buyers like me can have a bigger bargaining power and more choices in the market."

She said the entry price for investment in retail units in areas with a relatively high footfall was around HK$1 million to HK$2 million, compared to nearly HK$10 million in Hong Kong.

"Besides, the investment yield on shops is high and the management fee is much more affordable compared to Britain or Australia," she said.