A 10% drop in residential prices is projected for 2020 as the unemployment rate is forecasted to reach 7%; Investment market remains subdued with 50% of deals in Q3 involving PRC buyers

• Residential
  transactions in August fell by 29% m-o-m with RVD home prices edging lower by
  0.3% m-o-m; another 0.8% m-o-m drop is expected in August.
• Commercial
  investment market remained subdued in Q3 with total
  transaction volumes falling by 64.3% q-o-q.
• Hong Kong buyers
  remain subdued, while PRC activity is expected to be more active than local
  investors.

HONG KONG, CHINA -�Media OutReach - 8 September
2020 – The downward trend continued in both the residential and
investment markets in Q3 2020 as the pandemic and continuing geo-political
uncertainties continued to weigh on sentiment. Despite the
challenges, strong pent-up demand, government policy support, economic stimulus
packages and the low interest rate environment remain favourable factors that,
together, may stabilize the market and induce a rebound by the end of Q3.

Residential transactions
declined in Q3 by 6% quarter-on-quarter in both primary and secondary sales
markets but recorded a major increase of 30% when compared with Q3 2019. While
this indicates that social and economic factors continue to impact the residential
market, the unprecedented owner-occupier demand and anticipation of a
post-pandemic recovery can be strong stabilizers. Among individual estates,
property prices at Taikoo Shing as of August had fallen their lowest level
since January 2019 while those in The Harbourside have fallen even further, and
are now 10.6% below the previous trough in January 2019. Prices of popular
estates are expected to fall further in the near-term.

Mr Alva To, Cushman & Wakefield’s Vice President,
Greater China & Head of Consulting, Greater China, commented “The secondary sales market has come under severe challenges
from the pandemic blow. However, a recent decline in new cases coupled with
strong pent-up demand may support a rebound by the end of September 2020. Nonetheless,
from a more holistic perspective, with no lasting resolution to either the
pandemic or geo-political challenges and with unemployment forecast to reach 7%
by year-end, we expect home prices to remain under pressure and likely to
conclude the year with an average drop of 10% among popular estates.”

The investment
market remained subdued in Q3 as local and foreign buyers remained on the sidelines.
Year-to-date, a total of 32 major deals (each with a consideration of over
HK$100 million) have been recorded, of which just 10 were for commercial
property. Despite the fall in demand from local buyers, demand from PRC buyers
remained relatively stable, resulting in their accounting for half of the deals
concluded in the quarter. Among sectors, industrial was among the most active,
supported by purchases of en-bloc building. In contrast, investment into
retail, one of the sectors hardest hit by the pandemic, remained muted.

Mr Tom Ko, Cushman & Wakefield’s Executive
Director, Capital Markets in Hong Kong, said, “With
demand for commercial property expected to remain weak in coming months, PRC
buying activity should continue to serve as a stable pillar of demand even as
many local and foreign buyers continue to take a wait-and-see approach. Nonetheless,
based on current trends, both the number of transactions and investment volume
in 2020 are expected to fall to a 10-year low.”

About Cushman & Wakefield

Cushman & Wakefield (NYSE: CWK) is a leading
global real estate services firm that delivers exceptional value for real
estate occupiers and owners. Cushman & Wakefield is among the largest real
estate services firms with approximately 53,000 employees in 400 offices and 60
countries. Across Greater China, there are 22 offices servicing the local
market. The company won four of the top awards in the Euromoney Survey 2017 and
2018 in the categories of Overall, Agency Letting/Sales, Valuation and Research
in China. In 2019, the firm had revenue of $8.8 billion across core services of
property, facilities and project management, leasing, capital markets,
valuation and other services. To learn more, visit
www.cushmanwakefield.com.hk or follow us on LinkedIn (https://www.linkedin.com/company/cushman-&-wakefield-greater-china)