The ongoing violent protests in Hong Kong are paralyzing the real estate industry, an economic pillar contributing a whopping ten percent of the city’s GDP, costing firms billions of dollars and a loss of thousands of property sector jobs.
The city’s economy is headed toward recession by the end of the third quarter this year. The GDP contracted by 0.4 percent in the second quarter and Hong Kong authorities revised 2019 growth projections to zero to one percent.
In the real estate sector, Caixin found agents desperately looking for sales are selling property nearly 10 percent below market value.
“Recent protests have triggered huge selling pressure for developers’ stocks, because people are jittery about the escalating unrest and no one knows when it could end,” said Louis Wong, director of Phillip Capital Management, to CNN.
“It has already dampened buyers mood on the property market,” he added.
Caixin also reported that retailers, faced with less customers and vandalism due to pro-democracy protests, are demanding rental decreases of up to 30 percent and are beginning to organize with one another to collectively pressure landlords.
The real estate industry is also one the largest employers in Hong Kong. Hong Kong developers and real estate firms accounted for nearly a million jobs.
“If things keep getting worse, more than 3,000 agents could lose their jobs by the end of the year,” said Liu Wai-keung,CEO of real estate-giant Ricacorp Properties, to Caixin.
Pro-protests escalated in violence on the streets of Hong Kong over the weekend and caused major delays and cancellations at the Hong Kong International Airport.
Publicly-listed Hong Kong real estate firms lost nearly $60 billion in value since April, according to a report by Refinitiv.