Hong Kong property transaction volumes to drop by 19% in 2024

Investments are expected to reach HKD20b in the second half of the year.

Commercial real estate investment sentiment in Hong Kong remained subdued in Q2. According to a Colliers report, despite an uptick of +175% QoQ in the number of big-ticket deals* (22 deals), most were less than HKD200 million, and the total investment volume dropped to HKD5.3 billion, -4.6% QoQ. 

Here’s more from Colliers:

Distressed or discounted assets deals remained the key theme, accounting for 50% (11 deals) of big-ticket deals in Q2. Some deals closed with sellers realising a capital loss of around 60% compared with their purchase price in 2017-18. 

Luxury residential sales were stimulated by the removal of cooling measures in February, but banks’ cautious approach on mortgage approvals crimped transaction activities towards the end of the quarter compared to March and April.

Outlook

In H2, we expect sellers to become more realistic and more distressed deals will take place, while any potential U.S. Fed interest rate cut should boost buyers’ confidence to enter the market. 

As such, we forecast transaction volume in H2 will slightly edge up to HKD20 billion, from the low base in H1, pushing 2024’s total volume to HKD30 billion. Still, this is a YoY decline of 19%. 

Other than cash-rich investors, family offices and credit funds are also actively looking for new opportunities yielding at least 5% in the market. Apart from asset or share deals, buyers may also consider more complex transactions which will likely become more attractive in H2.

*Deal size HKD100 million or above, excluding residential sites and luxury residential premises.