Hong Kong Property Valuations Scrutinised as Lenders Navigate Market Stress

Hong Kong property valuations are under intensified scrutiny as the city’s deepest real estate downturn since the Asian financial crisis prompts the banking regulator to monitor risks more closely.

The Hong Kong Monetary Authority has increased its oversight of lenders’ refinancing decisions involving stressed developers such as Lai Sun Development, urging continued credit support while reviewing exposure to commercial property loans, which account for about 8% of HKD10tr (USD1.28tr) in lending.

Amid steep office price declines and concerns that some landlords seek overly optimistic appraisals, lenders have tightened loan-to-value ratios and begun conducting more frequent valuation checks.

Bankers warn that Hong Kong property valuations could face additional downward pressure if a wave of owners attempts to exit simultaneously, potentially amplifying systemic stress in the commercial real estate market.