‘Highly active’ market in city tops Singapore and Australia, although base effect, assets in receivership contribute to increase, a property consultancy says
Hong Kong’s commercial property investment more than doubled to US$3.1 billion in the second quarter, making it the fastest growing investment market in Asia-Pacific thanks to a strong increase in retail and office deals and a low base effect, according to a property consultancy.
The 129 per cent growth from a year earlier beat other top-performing markets including Singapore with 108 per cent growth and Australia with an 82 per cent increase, data tracked by the property consultancy showed.
“Hong Kong’s robust performance comes as investors selectively target assets offering immediate yield stabilisation,” the property consultancy said in a report.
This rebound in the second quarter helped drive 90 per cent growth in Hong Kong’s commercial property investment in the first half, it added.
“Hong Kong’s commercial real estate investment market remains highly active,” a property consultant said. “Despite ongoing macroeconomic uncertainties and a complex interest rate environment, we are seeing continuous investment activity flowing into the city.”
Office deals were notably driven by assets under receivership, the consultancy said.
One such deal was the reported HK$611.4-million (US$77.9 million) acquisition of 299QRC on Queen’s Road Central. Meanwhile, 184,041 sq ft One Bedford Place , a distressed office tower in Tai Kok Tsui, was purchased by Singapore-based investor Wee Hur Holdings for HK$748.8 million in June, according to data compiled by another property consultancy.
The interest in office assets came amid improving prospects for rents following a decline of more than 40 per cent since their 2019 peaks, according to the consultancy. In recent months, rents in prime office spaces, particularly in Central, have seen modest increases.
Hong Kong’s strong performance also contributed to a broader regional resurgence, with commercial real estate investment in the Asia-Pacific region jumping 38 per cent year on year to US$45.5 billion in the second quarter. For the first half, investment rose 35 per cent to US$92.5 billion.
“This marks the strongest first-half volume on record despite rising energy inflation, currency volatility and supply-chain disruptions,” the consultancy said in a statement. “Strong semiconductor and automotive demand propped up industrial manufacturing, while robust global [artificial intelligence] capex supported the region’s tech-driven export growth.”
Regionally, investment flows showed a clear structural shift towards technology-supporting assets and value-added real estate, the consultancy said. Across major markets like Japan and Australia, sectors were heavily propelled by strong data centre demand and logistics portfolio acquisitions, it added.
“While investors are navigating an unpredictable geopolitical backdrop and the reversing of the regional rate-cutting cycle due to stubborn inflation, the sheer scale of transactions this quarter shows that capital remains abundant,” another property consultant said. “Rental growth prospects across nearly all major markets and sectors are very compelling, driven by a lack of supply and rising replacement costs.”
Meanwhile, despite Hong Kong’s “fundamentals beginning to look up”, higher Hong Kong interbank offered rates could hobble its positive performance, according to another property consultant.
Hong Kong’s investors are making higher mortgage payments this year, with the city’s one-month Hibor standing at 2.61 per cent as of Monday, according to the Hong Kong Association of Banks. About a year ago, the one-month Hibor was 0.95 per cent.
