The Good, The Bad And The Ugly Of Property Last YearAnother year done, another where the sky didn’t fall. It’s easy to look back and pass judgment — hindsight is 20/20 after all — but there’s still no harm in offering props to the smart moves, hurling bricks at the dumb ones and letting the rest continue to simmer. Simplistic as they may be, here are some of the highs and lows of the property year.

The Good

2015’s One-Belt-One-Road (OBOR) initiative is considered by some the best new real estate-related policy to come down the pipe in some time, and should be a boon to both Hong Kong and Mainland commercial markets. “The move will encourage economic co-operation among different cities and countries in Asia, Africa and Europe regarding the construction of infrastructure, which will boost economic activities and hence the derived demand for properties, including office space, ports and logistics facilities in [locations] involved,” theorises Knight Frank Director and Head of Research & Consultancy, Greater China David Ji. Improved transport will also boost the flagging retail sector and put the SAR back in a driver’s seat of sorts. “Hong Kong, in particular, can facilitate the OBOR initiative by providing accounting, financing, legal, logistics and project management services, while mainland and foreign firms involved in OBOR are also expected to set up headquarters or branch offices in Hong Kong, boosting office and industrial property demand in the city,” finishes Ji.

Joanne Lee, senior manager for research and advisory at Colliers International, agrees on the power of Mainland connections, pointing out 2014’s Hong Kong-Shanghai stock exchange connection has had a positive influence on the city’s office sector, which was struggling a tiny bit until then. In October the vacancy rate in Central fell to its lowest level (1.3 percent) since 2008 and rents rebounded last year. “The growth of Chinese corporates in Hong Kong will continue to play a major part in redefining the office market,” say Lee. She also adds that the same corporate purchases — the Mass Mutual Tower in Wan Chai, One HarbourGate in Hung Hom — were a force for strengthening the market last year. “The Mass Mutual Tower deal broke the record for the most expensive building sold in Hong Kong in terms of lump sum ($12.5 billion) and average price ($36,187 per square foot), and the One HarbourGate deal marked the largest single office-tower purchase in the Kowloon district.”

The Bad

In April, the Monetary Authority announced that in its haste to protect the banks (the same ones that underwrote the 2008 GFC and actively help wealthy clients dodge taxes) new loan-to-value ratios would be slapped on all Hong Kong purchasers — including permanent residents and first-time buyers. “The worst property policy in Hong Kong is the fact that first time buyers are subject to the same cooling measures that buy-to-let investors are faced with,” says Jonathan Gordon, distribution director for IP Global. “As a result, a deposit of 40 percent is required for any property under $7 million. That makes it far harder for first-time buyers to purchase and will freeze large numbers out of the market who legitimately want to buy a place to live rather than speculate.” The idea may be rooted in our best interest: with interest rates primed to go up, mortgages become more expensive and it’s easy to run into budget problems. However, the brain trust at the Authority and the banks can surely find a way not to cut thousands and thousands of residents off at the knees.

Elsewhere, things got downright sad in the retail sector. Long the cream of the retail crop, Hong Kong lost its position as most expensive retail leasing city in the world (to New York), and while that may not affect many of us directly, it could in the long run. “China’s economic slowdown, the mainland’s austerity push and its anti-corruption campaign [have] resulted in weaker retail sales overall,” notes Lee. The net result: a hefty drop in high-street retail rents (off 25 percent). Mainland consumption patterns are still changing, and are likely to shave another 10 percent off prime rents, and will lead to more conservative buyers. Your shopping pattern is about to change too. Possibly drastically.

The To Be Determined

On the international front, whether or not the UK’s brand new stamp duty land tax (SDLT), set to be implemented April 1, 2016, will be considered a stroke of genius or an ugly moment in David Cameron’s legacy remains to be seen, but at first glance the new tax has sent a few shock waves through the market. Some UK media have already claimed it has sent investors running for cover. Essentially, the SDLT is an additional 3 percent for all residential properties purchased for rental purposes or second homes on a banded scale. Liam Bailey, global head of research at Knight frank in London explains, “It is another cost for landlords — so on balance is not helpful for those wanting to invest in the sector, however the reason why it has been introduced is due to the strength of the underlying economy and the fact that demand for property in London is significantly higher than current supply levels.” Good, bad or ugly? Time, indeed, will tell.