Funding costs rise as banks cut exposure to property
House prices expected to continue falling
Citi downgrades ratings on several HK property firms

HONG KONG, Jan 12 Reuters Hong Kong39;s property companies face a squeeze in 2024 from rising funding costs and sluggish home sales and office rentals, making creditors and investors cautious about developers financial health.

Some of Hong Kong39;s major banks have cut off fresh financing to the city39;s highly leveraged or weak property companies, four sources familiar with the matter said, forcing developers to seek more expensive loans in the private credit market.

With the outlook for Hong Kong39;s oncethriving property market looking increasingly uncertain, many banks are also shrinking existing loans or asking developers to top up collateral, the sources said.

As a result, funding costs are expected to increase, and given sluggish home sales and record high office vacancy rates, this year could be even more challenging for developers than last year.

Investors don39;t expect Hong Kong developers to default like their counterparts in mainland China, but they don39;t see a sector rebound any time soon.

They are cautious about the outlook, with the Hang Seng Property Index having plunged 30 in 2023, and off 60 from its alltime peak in April 2019.

House prices are forecast to continue their downward spiral this year, with UBS and Citi predicting a drop of 10, following a 20 decline since the 2021 peak, while vacancy…