Hong Kong banks tighten shop mortgage lending as retail property values plunge

Hong Kong's commercial property sector is facing a financing squeeze as banks pull back from shop mortgages, leaving potential buyers unable to secure loans despite sharp falls in property values, according to landlords and industry figures.

The lending drought is hitting even as the city's residential market has gained momentum this year, with banks actively competing for home mortgage borrowers. Industry advocate Shih told a press conference that buyers are "increasingly being turned away" and said "a considerable number of clients end up unable to get financing at the last minute". "If it weren't for this, there would be many more shop transactions," Shih added.

Double pressure on owners

Raymond Ho, convenor of advocacy group Momentum 107, which organised the press conference, said the sharp decline in shop values over recent years had "rapidly eroded the pool of available capital, weighing on investment and consumption". The event took place on Monday.

Banks are simultaneously pressing existing owners to repay loans amid falling property values while refusing to provide mortgages to new buyers, Ho said, a dual approach that discourages "both users and investors from entering the market, further reducing transactions".

Prolonging the slump

The financing squeeze could prolong the wider economic drag from the retail property downturn, according to Momentum 107. Industry figures warn that the reluctance to lend is deepening the city's shop slump at a time when commercial property values have already fallen sharply.

The complaint highlights a divergence in Hong Kong's property finance market, with lenders competing aggressively for residential mortgage business while effectively withdrawing from the commercial side.

Source: South China Morning Post