Banks Urged to Boost Commercial Property Support as Vacancy Rate Hits 40-Year High
Thestandard · 1 SOURCESabout 2 hours ago2 MIN
Summary
Centaline chairman Shih Wing-ching has called on banks to increase lending support for commercial and industrial properties, warning that the sector is currently undervalued. At a forum hosted by think tank 107 Momentum, industry leaders highlighted a 40-year high vacancy rate of 12.5 percent and proposed stamp duty reductions to stimulate transactions. The discussion emphasized how declining commercial property prices are draining social capital and creating a vicious cycle that suppresses investment and consumption.
Key Points
- Centaline chairman Shih Wing-ching urged banks to provide more support for commercial and industrial properties, noting current returns on shops are 4 to 5 percent with relatively low risk
- A forum organized by think tank 107 Momentum discussed the chain effects of the poor commercial property market, where vacancy rates have reached a 40-year high of 12.5 percent
- Tony Kwok Tak-leung, chairman of the Guangdong Hong Kong Macau Greater Bay Area General Chamber of Real Estate Industry, stated that mortgage interest rates remain at 5 to 6 percent, yet banks continue calling in loans from shop owners who are still making payments
- Raymond Ho Man-kit, convenor of 107 Momentum, warned that rapid price declines drain social capital, with banks pressuring owners to lower prices while refusing mortgages to new buyers
- Shih suggested the government consider lowering stamp duty on commercial and industrial properties to restore market confidence and gradually stimulate transactions
Why It Matters
The commercial property sector's deterioration poses systemic risks to Hong Kong's broader economy, as the vicious cycle of declining prices, reduced transactions, and tight credit constrains investment and consumer spending. Addressing these challenges through targeted policy measures could help restore market confidence and prevent further capital depletion that affects businesses across the territory.
The commercial property sector's deterioration poses systemic risks to Hong Kong's broader economy, as the vicious cycle of declining prices, reduced transactions, and tight credit constrains investment and consumer spending. Addressing these challenges through targeted policy measures could help restore market confidence and prevent further capital depletion that affects businesses across the territory.