One of five developers in Hong Kong did not have enough earnings to pay for interest expenses in 2023 due to higher funding costs and weak earnings, the International Monetary Fund said in a report Thursday.
The ratio of firms with structurally weak debt servicing capacity rose to 10.7%, the IMF said.
In profitability terms, the return on assets of local real estate companies fell to 1% in 2023 from 6% in 2018, while 23.5% of real estate companies incurred losses, the IMF said.
About 38% of real estate firms in the city were exposed to refinancing risks due to a negative estimated cash position and higher short-term debt, according to the multilateral fund.
Local developers' leverage could rise by 5 percentage points to 39% should inventory valuation decline by 10% and commercial property prices slide by 20%, the IMF said.
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