Hong Kong's booming property market looked set for further gains thanks to strong economic fundamentals, despite recent interest rate hikes, an international real estate firm said Tuesday.
Sustained growth in tourism would continue to drive demand for prime retail space, while office and luxury residential properties would see continued demand as more companies set up offices in the city, Jones Lang LaSalle said in a mid-year property review Tuesday.
"The outlook continues to be positive with economic fundamentals and tourism intact. While interest rates are likely to increase further in 2005, the interest rate hikes will place a psychological barrier on home buyers, and the impact is short term," said Kenneth Tsang, head of Greater China Research.
Market watchers have been concerned that recent interest rate hikes by the city's largest lenders such as HSBC Holdings and Bank of China (Hong Kong) would slow Hong Kong's robust property market, where property values in the supply crunched office sector are up by as much as 40 percent so far this year.
Hong Kong banks said Monday they were raising their best lending rates by 50 basis points, twice as much as last week's increase in U.S. rates.
Hong Kong tends to follow U.S. rate moves because its currency is linked to the U.S. dollar.
The number of property transactions in
Hong Kong fell nearly 15 percent in June from May.
For years, mortgage rates in
Hong Kong have been on offer well below the rates usually reserved for banks' best customers amid fierce competition for new loan business and soft demand.
Since April 1, however,
Hong Kong banks have effectively raised mortgage rates by up to 1.525 basis points to around 4 percent. Prime rates are 5.75-6.00 percent.
New housing mortgage loans in
Hong Kong fell 24.1 percent to HK$16.97 billion (US$2.18 million) in May from April while the number of new applications declined 32 percent.
LaSalle said shopping tourists would play an increasingly important role in retail sales with the capital value of rents, which rose by as much as 25.8 percent in the first half of the year.
The
Hong Kong office sector is seen buoyed by a window of short supply in the core business district set to last through 2007.
The real estate firm also sees demand for residential properties remaining firm with the improving employment market driving home buyers and with corporations expanding staff in the city on the back of growing trade relations between
Hong Kong and the mainland.
