Hong Kong property investment fails to breach the HK$10b mark yet again

Total commercial investment volume reached only HK$6.9b in Q3.

Despite a q-o-q improvement, Hong Kong’s overall investment market momentum remained low. According to CBRE data, total commercial real estate investment volume (deals worth over HK$77 million) increased by 29% q-o-q to HK$6.9 billion in Q3 2023, marking the second consecutive quarter that investment volume failed to breach the HK$10 billion mark. 

While the total number of deals was on par with Q2 2023, the figure was just 51% of the past four quarter average.

Here’s more from CBRE:

Redevelopment projects and end-user purchases accounted for the bulk of investment volume. Many deals involved strategic purchases, such as China Travel’s HK$898 million acquisition of De Fenwick Service Apartment. The property will be combined with an adjacent building for redevelopment. Elsewhere, China Merchants purchased a floor on Shun Tak Centre – China Merchants Tower for HK$778 million, expanding from an upper floor.

Including these two deals and other acquisitions by individual investors, Chinese capital deployed HK$2.2 billion or 32% of total investment in Q3 2023, a figure on par with the previous quarter.

Reeves Yan, Executive Director, Head of Capital Markets, CBRE Hong Kong: “The commercial real estate investment market was comparatively quiet under the high interest rate environment which results in deeper negative returns. Professional investors were mostly on the side assessing various market trends while less yield-sensitive end-users were more active looking for discounted assets. While borrowing costs are expected to stay at high levels for longer, the investment market will likely remain overall quiet for the remainder of the year. Retail assets will remain on local investors’ radar as consumption market sentiment improves. Should the government relax some of the restrictive measures on property demand in the upcoming Policy Address, overall investment market sentiment will likely see an improvement towards year-end.”