• Hometransaction volumes fell by 45% in first two months of Q3 from same period inQ2 as sentiment turned cautious due to trade tensions and local politicalissues
• Prices atrepresentative residential estates down by 3-5% from peak level in June
• The number of major transactions in the property investment marketdropped 55% from Q2 with a significant decline in office deals.

HONG KONG, CHINA - Media OutReach - 10 September 2019 - Ongoing social unrestand the escalation of the Sino-U.S. trade tensions have affected marketsentiment in Q3, with property transaction volume and prices trending towardsthe level of Q1 of this year. Prices of some representative estates haveretreated by 3-5% in Q3 thus far from the peak level in June. The investmentmarket has also been quiet, with the number of major transactions dropping 55%quarter-on-quarter, as investors remained on the sidelines.

Since anescalation in trade tensions arising from new tariff threats in May sentjitters across global stock markets, plus local political issues caused achange in buyers' sentiment, property sales began to drop in June afterreaching a peak in May. In terms of the number of residential sales & purchaseagreements (residential S&Ps), sales fell from 8,208 in May to less than5,000 in June through to August. The combined residential S&Ps figure ofJuly and August amounted to 8,889, which was down by 45% from the same periodin Q2, and was comparable to the level in the first two months of Q1 this year(8,632). Mr Alva To, Cushman &Wakefield's Vice President, Greater China & Head of Consulting, GreaterChina commented, "As the market sentiment remained cautious over theprolonged unrest and new tariff announcements, it is expected that theresidential S&Ps will stay around the level of 4,500 in September."

Home prices retreated along with the drop insales. According to government figures, the price index of private domesticunits has seen a slight drop in both June and July, and Cushman & Wakefieldexpects a further drop of 2.7% in August from the peak level in May. In termsof actual prices, by mid-September, some popular mass residential estates suchas City One Shatin and Taikoo Shing have recorded a drop in prices of 4-5% fromthe peak level in June. Prices for luxury residential represented by ResidenceBel-Air and The Habourside were on a firmer footing with a drop of about 3%from the June peak. Year-to-date prices in mass residential properties such asCity One Shatin and Taikoo Shing still showed growth of 19.9% and 14.9%,respectively, from the beginning of January. Meanwhile, prices in luxuryprojects like Residence Bel-Air and The Habourside have increased by around 10%thus far.

MrTo commented, "Despite the worsenedmarket sentiment and drop in sales, landlords generally have strong holdingpower and thus panic sales have so far been sporadic. Given the underlyingfactor determining the price trend is economic fundamentals, and as the unrestpersists, the tourism and retail sectors have been hit. Over the long run thiswill hurt the status of Hong Kong as an international financial hub andpossibly raise the unemployment rate, which in turn will affect the economicperformance, and home prices will be under greater downward pressure. Shouldthe current unrest continue, we would expect a further drop in home prices by5-10% through the end of this year."

In the property investment market in Q3, thenumber of major deals (each with a consideration of over HK$100 million)dwindled to 30 by mid-September from 66 in Q2 - a drop of 55%, or the same asthe low point in Q3 2013 when the double stamp duty was launched that pushedthe volume of major deals down to 30. This quarter the total considerationshrank to one-third of the Q2 level from HK$34.4 billion to HK$10.6 billion.

As in Q2, sales of luxury residentialdominated the investment market, accounting for 47% of transactions in thequarter, while there was significant fall back in office transactions, both interms of number and consideration, by 87% and 97% respectively. The industrialsector held up to its level in Q2, while the site and hotel sectors made arecovery, with sales of projects including a serviced apartment tower at 111High Street, Sai Ying Pun and a residential site in Tuen Mun (TMTL 549)notching a total consideration of HK$2.1 billion, up from HK$0.8 billion in Q2.

MrTom Ko, Cushman & Wakefield's Executive Director, Capital Markets in HongKong, said, "With the current politicalsituation affecting rental and price trends, local investors were mostly on thesidelines. Mainland investors are also quiet since the recent devaluation ofthe Renminbi, but end-users are making occasional purchases of luxuryresidential. As for funds, the key condition for underwriting deals lies in howthe current situation in Hong Kong will evolve. It will only be when theuncertainties clear up and market confidence resumes that we will seeimprovement in the investment market, however, given the current marketsentiment, the transaction volume in Q4 is expected to drop further."

About Cushman & Wakefield

Cushman & Wakefield (NYSE: CWK) isa leading global real estate services firm that delivers exceptional value forreal estate occupiers and owners. Cushman & Wakefield is among the largestreal estate services firms with 51,000 employees in approximately 400 officesand 70 countries. Across Greater China, there are 22 offices servicing thelocal market. The company won four of the top awards in the Euromoney Survey2017 & 2018 in the categories of Overall, Agency Letting/Sales, Valuationand Research in China. In 2018, the firm had revenue of $8.2 billion acrosscore services of property, facilities and project management, leasing, capitalmarkets, 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)