HK CEOs less optimistic about economic growth

Executives’ confidence in their revenue growth also declined

Only 62% of executives in Mainland, China and 68% in Hong Kong expressed optimism on near-term economic prospects, making them less confident than their global counterparts (77%), a study by PwC found.

There was also low optimism towards their revenue growth prospects amongst both HK and Mainland CEOs, the study said. Confidence in revenue growth amongst HK CEOs declined by 2%, and only 48% of Mainland CEOs expressed high confidence.

Mainland Chinese CEOs cited health risks (42%) as the top threat to their respective company’s growth in the next 12 months, followed by macroeconomic volatility (41%), geopolitical uncertainties (32%), and climate change (31%).

Since the study was conducted in October and November 2021, it has yet to reflect the spread of Omicron in China, as well as the geopolitical tensions between Russia and Ukraine.

Meanwhile, Mainland China was

Thomas Leung

There was low optimism towards revenue growth prospects amongst HK CEOs

named the top market for growth amongst HK CEOs (78%) and ranked second amongst global CEOs (27%).

Mainland Chinese CEOs, for their part, are considering the US (29%), Australia (24%), Germany, and Japan (23%) as their most important overseas markets for revenue growth over the next 12 months.

In terms of priority markets for outbound investment, Mainland Chinese CEOs are targeting the Asia Pacific (66%), Belt and Road countries/regions (50%), and the EU (48%) in the next 12 months, whilst Hong Kong CEOs plan to invest in the Asia Pacific (69%) and the ASEAN region (46%).

“In the past year, China’s economy has maintained a steady recovery trend even in the complex and severe domestic and foreign context, facing many risks and challenges. Looking into 2022, businesses can expect to face additional challenges posed by macroeconomic volatility, geopolitical tensions, cyber risks, and the increasingly urgent need to transition to a net-zero economy,” Thomas Leung, Managing Partner - Markets, PwC China said.

“Looking ahead, CEOs in Mainland China and Hong Kong will need to rethink their strategic roadmap for sustainable growth and identify longterm growth opportunities by going beyond short-term financial metrics to navigate these turbulent times and ensure sustained outcomes,” he added.

HONG KONG WILL SEE RISE IN DEMAND FOR MEDICAL REAL ESTATE—HERE’S WHY

Demand for medical real estate is expected to rapidly grow in Hong Kong, which will be driven by the market’s ageing population, increasing spending on medical services as well as wider insurance coverage, CBRE reported.

CBRE had initially reported in 2019 that medical centres in the city would need an additional 1 million square feet (sq. ft.) of commercial space for expansion. This was, however, delayed due to the volatility of the economy, and changes in policies, amongst other factors.

According to CBRE, the “silver hair” population of Hong Kong, or those above 65 years old, is expected to climb to 2.7 million by 2047 from 1.5 million in 2022.

Medical expenditures, meanwhile, accounted for 6.5% of the city’s gross domestic product per capita in 2019/2020, up from 5.1% in 2009/2010. Moreover, insurers have increased their medical spending in Hong Kong four times to 35% from 8%.

“Rising IPO and M&A activity within the healthcare sector will also accelerate expansion by medical providers,” Marcos Chan, Head of Research, CBRE Hong Kong, said.

“Another driving force is the growing pool of medical talent, with the Government setting up a pathway to introduce nonlocally trained doctors via the passing of the Medical Registration (Amendment) Bill 2021 in October 2021.”

CBRE noted that the active health sector M&A, coupled with the collaboration of the medical centres and insurance companies are generating new requirements.

With just under 14 million sq. ft. of new supply due to come on stream from 2022 to 2026, Hong Kong’s Grade A office market will provide substantial expansion opportunities for medical occupiers over the next five years.

There is a need for an additional 1 million sq. ft. for medical centres