A general view shows public housing residential buildings in Hong Kong during the evening on Dec 2, 2020. (ANTHONY WALLACE / AFP)

Leveraging an abundance of liquidity, low interest rates and new supplies, home prices in Hong Kong are likely to stay flat or see a 5 percent increase this year, despite the impact of COVID-19 and Sino-US conflict, investment banks predicted.

Residential property prices in Hong Kong edged down 1.1 percent last year while those in the Chinese mainland and Singapore increased 7.6 percent and 2.2 percent, respectively. Housing prices in Hong Kong and the Chinese mainland have doubled in the past 10 years, according to BNP Paribas.

John Lam, head of China and Hong Kong property team at UBS Research, expects prices to remain unchanged despite the coming supply boom in new residential programs expected to provide up to 27,000 units, citing residents’ overwhelming demand for houses.

Chinese mainland property developers saw their highest contracted sales in the Greater Bay Area as more people moved to live in that region. Growth in the area reached 17.1 percent year to year, according to BNP Paribas

BNP Paribas expects Hong Kong property prices to rise up to 5 percent in 2021. According to Wee Liat Lee, managing director for corporate broking and sales Asia-Pacific at BNP Paribas, a steady performance can be expected this year with anticipated growth within 5 percent due to global liquidity and low interest rates. 

Chinese mainland property developers saw their highest contracted sales in the Greater Bay Area as more people moved to live in that region. Growth in the area reached 17.1 percent year to year, according to BNP Paribas. 

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Commercial real estate, however, is expected to see further uncertainties. With work-from-home arrangements becoming more widespread, companies will likely reconsider the need to buy or rent physical space. Pascal Martin, partner at OC&C Strategy Consultants, expects the office market to take a hit, because “people have become used to work-from-home, companies have realized that they don’t need people to be in the office five days a week”.

Central grade A office vacancy rates peaked at 6.8 percent last year, the highest in more than a decade, as companies either relocated or downsized, including long-term tenants such as Nomura, Adidas and Swarovski.

UBS expects Hong Kong home prices to remain flat in 2021, as more new apartment units will be introduced to the market this year. However, more retail space is forecast to be sold this year, helped by a mass vaccination program, the easing of border controls and a stronger renminbi. 

Lee believes consumers’ behavior has been altered by the recent development of tech companies and the pandemic, contributing to the progress of e-commerce. Lee believes the e-commerce trend will continue into 2021.