Property market outlook hangs on global vaccine rollout

This, however, will still depend on local consumption behaviour, according to OCBC Research.

The Hong Kong government has projected that some 18,230 and 19,980 residential units will be completed by 2021 and 2022, respectively - lower than the 20,890 units last year. However, these figures can still improve should global activities return to normal with the help of vaccines.

“The outlook of Hong Kong's property market may improve should global economic activities resume normalcy on successful vaccine rollouts,” the OCBC Treasury Research said in a report.

“Having said that, the outlook of different segments may still vary.”

In Hong Kong, more than 443,000 have received their first dose of COVID-19 vaccines, whilst some 18,500 individuals have received their second, as of 28 March. OCBC says economic recovery will remain slow after it suspended the rollout of vaccines developed by BioNTech.

In its 2021 Hong Kong Property Review, the Rating and Valuation Department (RVD) reported vacancies rose 4.3% by the end of 2020, or 52,370 in the private domestic segment.

“Residential property market is likely to remain resilient owing to the low interest rates, solid demand, and low near-term supply,” the report read.

Overall vacancy rates in private offices increased 2.5 percentage points to 11.5% year-on-year. The vacancy rates of Grade A, Grade B, and Grade C all climbed by 11.8%, 11.9% and 9.4%, respectively.

The RVD forecasted that completions in 2021 would reach 71,000 square metres, but will then rebound to 275,000 sqm. in 2022. Grade A completions will be around 45,000 sqm, in 2021 and 185,000 sqm in the following year.

For private commercial properties, completions are expected to further decline to 53,000 sqm of units having dropped to 67,000 sqm in 2020. This is likewise expected to rebound in 2022 to 173,000 sqm.

“The e-consumption vouchers to be launched during summer holiday may revive local consumption and support the retail shop market,” the OCBC Treasury Research also said.

“However, any rebound of office property and retail property markets may be restrained respectively by the structural change in work arrangement and consumption behavior.”

Retail rents during the year were affected by the softening of retail sales due to the impact of COVID-19 pandemic on the economy, particularly in the tourism sector.