Jones Lang LaSalle anticipates that mainland Chinese buyers' overseas investment regulations will have a limited impact on Hong Kong's property market, with the sector expected to gradually absorb the changes, according to the firm's Hong Kong chairman.

The forecast sees mid-sized residential property prices climbing between 5% and 10% for the full year, while the rental segment is poised for increases driven by recovering demand.

Data from the Hong Kong Rating and Valuation Department shows the private residential property price index stood at 321.5 points in July, marking a 0.46% month-on-month decline that ended a 13-month upward streak. On an annual basis, prices still rose 11.6%, with cumulative gains of 7.3% recorded in the first seven months of 2024.

Mainland buyers have been a key demand driver for Hong Kong's property market in recent years, the chairman noted. Following Beijing's June announcement of tightened controls on overseas investment and taxation, some purchasers have adopted a wait-and-see stance, holding off until implementation details are clarified. This cautious sentiment contributed to reduced residential transaction volumes in June and July, alongside the index dip, with short-term pressure expected to persist on both prices and sales activity.

However, even with additional tax obligations on overseas property acquisitions, the impact for mainland investors primarily translates into higher acquisition costs. The market is likely to steadily digest this adjustment, suggesting limited long-term consequences for Hong Kong's real estate landscape, he added.

The projection for mid-sized homes points to a 5%-10% annual price increase, with the bulk of that growth already realized in the first half. On the rental front, continued upward pressure on rents is anticipated, supported by fresh student housing demand and a rebound in expatriate arrivals to the city.