HONG KONG -- Real estate stocks here took another beating Tuesday as more investors saw an expected American interest rate hike bringing the days of cheap money to an end.
Henderson Land Development closed down 2.69% at 47.10 Hong Kong dollars ($6.07), having hit an intraday low of HK$47.05. Hang Lung Properties, Sun Hung Kai Properties and Cheung Kong Property Holdings also had an off day. All have fallen roughly 10% since Oct. 26, the eve of the last Federal Open Market Committee meeting in the U.S.
Deutsche Bank predicts that Hong Kong home prices may drop 33% when interest rates here jump 25 basis points after a rate increase by the U.S. Federal Reserve, The Standard reported Tuesday. Real estate developers are putting up more homes for sale ahead of a rate hike, according to another item in the English-language newspaper.
Market observers widely expect the Fed to raise rates in light of October's FOMC meeting and jobs data. With the Hong Kong dollar pegged to the greenback, interest rates here also track those in the U.S.
When rates are low, home sales and property transactions flourish, and debt-ridden real estate developers do not pay much interest. Higher rates will likely send these trends into reverse.