Expect Hong Kong property discounts to stay: Swire CEO

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Real estate investors looking to snap up a property in Hong Kong can expect discounts to remain a trend for some time to come, according to Martin Cubbon, CEO of Swire Properties.

"The discounting will continue, and it will continue for as long as the margins justify it. Right now, the margins are still pretty good for developers and therefore to stimulate demand at a time when government is suppressing demand with its duties is not unnatural," Cubbon told CNBC on Monday.

"There's an expectation in the market place that you need to [offer discounts], and it's quite hard to wean people off it, so I think will mean it will stay for a while," he added. Swire Properties owns and operates mixed-use commercial properties in Hong Kong and Mainland China.

(Read more: Singapore and Hong Kong housing faces 'double whammy')

Hong Kong is one of the most expensive property markets in the world, with prices more than doubling since 2008, propelled by low interest rates and tight supply in the market.

Swire: Discounts to remain in Hong Kong property
Swire: Discounts to remain in Hong Kong property   

However, there have been increasing signs of a slowdown in the space. Last year, the number of properties sold in Hong Kong declined by more than a third in 2013 to a 17-year low as the government's decision to hike the sales tax deterred buyers. In February 2013, the city doubled the sales tax on property costing more than HK$2 million ($258,000) to 8.5 percent of the purchase price.

Home prices rose just 2.8 percent last year, according to Barclays, a notable deceleration from 21.3 percent in 2012. Since 2008, prices rose 111 percent in total, the bank added.

(Read more: Hong Kong's housing market is 'least affordable': survey)

Discussing his outlook for property prices, Cubbon said, "You've seen discounting in the range of 10-20 percent over the course of the last year. I don't think it's going to get much worse than that."

"We have seen stability in prices across the board and selective discounting, and I think stability of a period of 2-3 years is probably a welcome change," he said.

While the government's raft of property measures have begun to show signs of moderating the market, Cubbon says they are unlikely to be rolled back until supply and demand get back in balance.

The government has made increasing housing supply a top priority. At a policy address earlier this year, Hong Kong's Chief Executive C Y Leung said the government is doing its utmost to increase land supply, and in formulating a long-term housing strategy. He estimates the government can roll out 210,000 homes in the next five years if it is able to rezone some 150 sites for residential use.

China slowdown manageable

Cubbon views the slowdown in China as a positive development as it reflects the government's push to rebalance the economy from an investment-led to consumption-based economy.

"All their efforts in restructuring the economy make sense. In that period of significant change, you'll find a little bit of turmoil," he said.

(Read more: A risky year for the global property market?)

He said while the commercial and retail segments of the property market are holding up, hotels are struggling given supply-demand imbalances.