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Hong Kong Home Prices to Fall As Residents Leave, UBS Says

Buildings are seen from Victoria Peak at dusk in Hong Kong, China, on Wednesday, 28 Aug. 28, 2019. Hong Kong's hotel industry is struggling with a collapse in bookings after thousands of protesters shut down flights from the territory's airport in an escalation of months of clashes with police.

Hong Kong’s home prices are set to decline in 2022 as residents continue to leave the city, according to UBS Group AG.

Residential property values in Hong Kong will fall by around 5% this year due to persistent population outflow and imminent interest rate increases, John Lam, head of China and Hong Kong real estate research at UBS, said in a media briefing Monday.Restrictions on capital outflows from mainland China and the country’s slowing economic growth may also drag down home prices in the city, Lam said. Mainland Chinese buyers have been an important source of demand in Hong Kong’s residential market.

On top of the local residents that are leaving amid China’s tightening grip on the city, expatriates are also making an exit from the Asian financial hub. Hong Kong’s aggressive virus strategy including a 21-day quarantine for arrivals is increasingly prompting expatriates to consider relocating elsewhere.

UBS’s bearish view on Hong Kong property is shared by Citigroup Inc. and Morgan Stanley, which predict home prices to drop by as much as 10% and 2% respectively. JPMorgan Chase & Co., however, expects home values to climb as much as 10%, citing strong housing demand and minimal impacts from rising interest rates.

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