〈Asian Post, November 17, 2018〉Hong Kong's booming economy is running out of steam, having grown at a slower than expected 2.9 per cent in the third quarter this year under the weight of weakened property and stock markets.

The government, which revealed the city's economic performance yesterday, warned of "increasing downside risks" and repercussions from an extended US-China trade war.

Gross domestic product slowed from a 3.5 per cent rise in the second quarter and a 4.6 per cent jump in the first quarter.

Some economists had estimated third-quarter growth at 3.3 per cent and forecast it would further slow to below 3 per cent in the final quarter of this year.

The government estimated full-year growth at 3.2 per cent, which was still within its earlier projection of 3 to 4 per cent.

The city, which has long served as a middleman for the East and West in trade and services, faces rising headwinds from global trade turmoil as the trade war escalated in September.

"The impacts on Hong Kong's external trade have begun to surface, and are likely to become more apparent in the near term," government economist Andrew Au Sik-hung said of the trade war.

Hong Kong, which has nearly half of its exports to the United States from China exposed to punitive tariffs, is trapped in the middle of the trade war.

〈Asian Post, November 16, 2018〉Country Garden Holdings, the mainland's largest developer by sales, is bracing for a potential loss on its majority-owned residential project in Ma On Shan, as an initial batch of flats are released at a starting price below development cost, analysts say.

The developer said yesterday the first batch of 110 flats at the 547-unit Altissimo would be offered at a starting price of HK$13,887 per square foot after factoring in a discount of up to 14 per cent.

In September last year, Country Garden paid Wang On Properties HK$2.44 billion, or HK$10,500 per square foot, for a 60 per cent stake in the 387,500 sq ft lot.

Taking into account construction costs of roughly HK$4,000 per square foot and interest expenses, surveyors said the overall investment cost would be HK$15,000 to HK$16,000 per square foot.

"Some mainland developers that bought land at ultra-high prices in the past two years may face a potential loss or just break even when they release the properties now," said Joseph Tsang, executive director at JLL, adding mainland players were more vulnerable than local ones if prices continued to correct because of their high land acquisition costs.

Tsang forecast home prices would fall 15 per cent by the end of next year, although a deeper 25 per cent correction was possible as the knock-on effects from the US-China trade war reverberated through the stock market and the economy.

In a sign that the property market continues to cool, several new project launches failed to sell the first-day batch of flats.

〈China Daily, November 16, 2018〉In recent months, there has been no shortage of ominous signs that all isn’t well with Hong Kong’s property market.

One of the city’s largest property agents reported a complete drying up of business in weeks. Others were busily downsizing by closing down underperforming outlets and trimming staff to save costs amid lean times.

Landlords of apartments in some of the most popular housing estates, such as Tai Koo Shing and Mei Foo, have been slashing prices by 10 to 20 percent to unload their holdings. Sluggish sales of new flats in various housing projects have forced developers to cut prices and offer easy credit to woo the shrinking crowd of potential homebuyers.

A combination of factors has been attributed to souring what had been once a red hot market, and breaking the spell that had fueled the great property rush by thousands of families in the belief that property prices would never fall. They were wrong.

Official surveys have shown that home prices in both the primary and secondary markets began to fall in August — the first month-on-month decline in 27 months. Based on continuous sluggish sales, average property prices are expected to dip further in the following months, setting in motion the property market down cycle that could last up to five years, as past experience shows.

That’s not necessarily a bad thing. Having gone straight up for more than two years, property prices are widely considered to be long overdue for a correction. Some economists even call that a healthy adjustment that can help ease the social tension caused by skyrocketing prices in the past.

〈China Daily, November 15, 2018〉Link Real Estate Investment Trust is considering buying shopping centres and office properties in Hong Kong and top mainland cities, as tightening credit conditions point to an ideal period for bargain hunting for physical assets.

Link Reit has cash and committed undrawn credit facilities of HK$14 billion after selling 17 malls in Hong Kong.

"We are always looking at opportunities in Hong Kong and China," said Nicholas Charles Allen, chairman of Link Asset Management, the manager of Link Reit. He added that investment on the mainland would rise from 12.5 per cent to 20 per cent.

George Hongchoy Kwok-lung, chief executive of Link Asset Management, said yesterday that properties bought on the mainland had seen better growth than properties in Hong Kong. Speaking after the company announced results, Hongchoy said there was no particular time frame for any acquisitions.

"We expect more individual investors will sell [properties] at good prices amid a tight financing environment. We hope [transactions] can be realised as soon as possible," he said.

Consultancy CBRE said in a report yesterday that mainland Chinese property companies and funds had slowed the pace of investment because of an unfavourable lending environment.

"Domestic property companies shifted from expansion to portfolio repositioning mode due to deleveraging and the slowdown of residential sales," the report said. "Cash-rich developers are looking to take advantage of the quiet market to expand their land banks."

The report also noted the mainland commercial property market had seen a steady increase in activity from foreign investors as they faced less competition from domestic groups.

〈Economic Daily, November 14, 2018〉Shanghai ranks first among Chinese cities in preparedness to manage financial uncertainty, according to a survey of 17 major business centers in the AsiaPacific region.

According to the “Prepped Cities Index” in a report by real estate consultancy Cushman & Wakefield, Singapore; Melbourne, Australia; and Shanghai are the three bestprepared cities among the 17 Asia Pacific cities it reviewed. The survey assessed macroeconomic, structural and defensive factors, as well as social indicators in builtup environments.

“Chinese cities performed very well … with great potential to improve further in years to come given their relentless drive to modernize,” said James Shepherd, managing director of Greater China research at Cushman & Wakefield.

All five Chinese cities reviewed — Shanghai, Beijing, Shenzhen, Guangzhou and Hong Kong — ranked among the top 10, showing their high level of preparedness for future uncertainties.

The survey looked at eight indicators across built environments (including rent volatility, obsolescence and sustainability) and governance and environment (including governance, terrorism, talent, susceptibility and cybersecurity).

“This index uses a combined approach of assessment to help identify which cities are best prepared to deter and manage a crisis against future uncertainty,” said Dominic Brown, head of AsiaPacific research for the consultancy.

Given that real estate is a pillar of the regional economy, coupled with the massive amounts of investment in the built environment, the real estate industry can directly play a role in making cities better prepared for the future, the report said.

Shanghai has outshined all the other cities in terms of real estate preparedness, boasting low cost volatility and a robust pipeline of new office space.