Knight Frank: There is still downward pressure on property prices in the Greater Bay Area, with a possible decline of 0-5% for the whole year.

JLL released a review of the residential and commercial property investment market in the Greater Bay Area for the first half of 2025, as well as an outlook for the second half of the year. Tao Ruhong, Vice President of JLL Greater China and Head of Strategy and Development Advisory in Greater China, stated that the tariff uncertainties led to a sluggish atmosphere in the second quarter of the Greater Bay Area residential market. He believes that market confidence will take time to recover, and even though there may be a easing in the trade tensions between China and the US in the second half of the year, uncertainties still persist. A cautious approach is expected to continue in the third quarter, and transaction volumes may not see a significant rebound. However, there is still demand supported by rigid and improvement factors. JLL estimates that there will be an average of 27,000 to 28,000 first-hand transactions recorded per month in the second half of the year, with an annual sales figure of around 300,000 units. Property prices in the Greater Bay Area are still under pressure, and may decrease by 0-5% for the year. Tao Ruhong mentioned that with the central and local governments continuing to loosen demand-side policies and actively promoting the construction of "good houses", pent-up demand for both rigid and improvement-type housing is expected to be further released. On the other hand, the mainland Chinese government has implemented measures such as the storage and purchase of commercial housing with special bonds in the past six months, which will effectively help ease developers' financial pressures and promote a balance in the real estate market supply and demand, boosting potential buyers' confidence and supporting the real estate market's "stabilization". In the first half of the year, first-hand sales figures in Guangzhou and Shenzhen stood out, reflecting the demand for premium properties in prime locations with reasonable pricing under the unstable market environment. Chen Caili, Assistant Director General Manager of JLL China Capital Markets, expressed that in the second half of the year, logistics and commercial sectors are expected to continue outperforming other property types. With the continuous expansion of cross-border e-commerce, the demand for logistics assets in recent years has been strong and has always been a focus for investors. However, the Greater Bay Area's warehouse market is expected to see a substantial increase in new supply in the next two to three years, leading to a rise in vacancy rates and rental levels under pressure. Chen Caili noted that since the beginning of the US-China trade war, market sentiment has been volatile, and logistics asset owners have become more pragmatic, allowing for greater room for negotiation, narrowing the gap in expectations between buyers and sellers, thereby facilitating more transactions of logistics facilities. Institutional investors and long-term investors are expected to take advantage of this opportunity to bargain. JLL expects more high-quality commercial assets to be transacted in the second half of the year. With the overflow of Hong Kong consumers' purchasing power and the trend of transitioning towards mid-to-low-end consumption by residents, shopping malls and community commercial projects with excellent operational performance are favored by the market, and potential investors are also actively bidding. However, owners of shopping malls in first-tier cities are more reluctant to sell. Conversely, in second-tier cities, owners are more practical, making mature community commercial projects the preferred investment sector for insurance and real estate funds. JLL stated that in the first half of the year, real estate policies of various regions in the Greater Bay Area continued to promote stabilization and rebound, loosening demand-side policies, and focusing on easing the financial pressure on the supply side, resulting in decent performance in both overall first-hand residential sales figures and prices in the first quarter. However, from April onwards, the market sentiment began to be affected by the uncertainties brought about by the tariff war, leading buyers to adopt a more cautious stance, causing the residential property prices to stop rising in the second quarter. In the first half of the year, overall first-hand residential sales figures in the Greater Bay Area increased by 3% compared to the same period last year. In terms of commercial property investment market, owners have become more pragmatic, with industrial logistics accounting for over 50% of total transactions in the first half of 2025, including transactions involving large-scale logistics assets packages. Meanwhile, the heat for community commercial projects continues to rise, with projects offering stable rental yields being favored by investors. JLL believes that more high-quality commercial assets will be transacted in the second half of the year. Tao Ruhong stated that the most important driving factor for the recovery of the mainland Chinese residential market is not policy-related, but the overall economic environment. He pointed out that if positive factors release investors' purchasing intentions, there can be a significant rebound, but currently, market confidence is lacking. He mentioned that if the Federal Reserve cuts interest rates, it will have a positive impact on the mainland Chinese residential market, especially attracting long-term international investors.