Central rents to fall 14% in 2012, says analyst

The downturn is unlikely to be anywhere near as severe as in the late-1990s, according to HSBC.

HSBC Global Research said:

The property market faces a downturn in 2012, but it is unlikely to be anywhere near as severe as in the late-1990s.

With the economy set to skirt recession, we expect home prices to fall 15% in 2012, while property yields rise and affordability begins to look stretched. All told, we expect a moderate downturn, barring a recession, supply shocks or spiking rates.

In the Hong Kong office sector, we expect Central rents to fall 14% in 2012, restoring affordability amid macro uncertainties, while Central office capital values should see a steeper fall of 30%.

By contrast, overall Grade A office and retail rents should show resilience in 2012, with the former expected to fall 4% and the latter expected to rise 5%.