Hong Kong’s Financial Secretary expects the real estate market to see recovery

Paul Chan, the Financial Secretary of Hong Kong, recently commented on the state of the city’s economy, noting that he is optimistic about economic prospects in 2023. He noted that the expects the local real estate market to explode following China’s border reopening.

The reopening is a part of easing the covid measures which China previously started strengthening, causing concern among citizens, investors, businesses, and more. Hong Kong suffered as well, with its exports, tourism, and local service industry all suffering noticeable hits. Now, Chan says that he expects all of these to see a rebound.

This will lead to an increase in consumption, which he believes will start to rise in the first quarter, compared to the previous year. However, he expects to see the real estate sector recover the most, as it has been hit the strongest by the surge of global interest rates and economic weakness. In 2022, the transaction volume in the sector dropped by 38% in the first 11 months, according to his report.

He did note that he expects additional rate hikes from the US Fed, which will also be followed by the rise of interest rates in Hong Kong,  as well. But, China’s border reopening should still lift the general sentiment.

Hong Kong and China will reopen borders

Meanwhile, Hong Kong’s Chief Secretary, Eric Chan Kwok-ki, said that Hong Kong is trying to reestablish quarantine-free travel with China. According to him, this should happen by January 8th. Eric Chan said that the first stage of the plan is to set quotas and limit the number of people who can travel to and from Hong Kong.

He added that this would only be temporary, and the borders would be open fully, eventually. As for when it might happen, it depends on how the first stage of the plan goes. The conditions will decide the speed at which the borders will reopen.

If Hong Kong starts receiving visitors from mainland China, this will mean a massive boost to the city’s damaged economy. It has been over three years since China shut down its borders, and Hong Kong itself had some of the strictest anti-COVID rules in the world until the second half of 2022.

Now, the city intends to increase the frequency of air, land, and sea travel in order to meet the demand. It will also open some checkpoints that were closed previously. In other words, Hong Kong is determined to restore quarantine-free travel. Meanwhile, China has also decided that it will stop requiring new arrivals to go into quarantine, also starting on January 8th.