Hong Kong commercial property investments down 5.5% to HK$13.2b in Q1

There were only 13 deals during the quarter.

According to CBRE data, commercial real estate investment volume in Hong Kong (deals worth over HK$77 million, excluding pure land or related transactions) edged down 5.5% quarter-on-quarter to HK$13.2 billion this quarter.

Slow investment momentum was partly due to the U.S. Federal Reserve opting to keep interest rates unchanged in Q1 2024. The 1-month HIBOR dropped to 4.8% in March from 5.6% in December 2023, while Hong Kong’s Best Lending rate remained unchanged.

Here’s more from CBRE:

Only 13 deals were completed this quarter, with two significant transactions accounting for 84% of the total investment volume. Major deals included a Taiwanese investor’s acquisition of Nexxus Building in Central for HK$7.0 billion and Chinachem’s purchase of D. PARK mall from New World for HK$4.0 billion. Most investors continued to adopt a wait-and-see approach amid the continued high-interest rate environment. 

Reeves Yan, Executive Director, Head of Capital Markets, CBRE Hong Kong: “The removal of all demand-side management measures in February and the relaxation of loan-to-value ratio caps for commercial properties offer a more investor-friendly environment. However, negative carry remains a high barrier for investors under the continued high-interest rate condition. The quarter has yet to see a notable recovery in investment demand, however, the total lump sum was able to stay resilient compared with the previous quarter. During the quarter, we noticed the price correction for office and warehouse properties has slowed down while that for retail properties is going up. Should there be further signs to indicate interest rate cuts in the latter half of the year, we expect investment momentum to gradually accelerate.”