Commercial real estate investments in Hong Kong up 17.5% to HK$16b in Q2

The industrial sector accounted for almost half of the investment volume.

Hong Kong’s commercial real estate investment volume reached HK$16.0 billion in Q2 2022, according to data from CBRE. Though it increased 17.5% q-o-q, investment volume fell 42.4% y-o-y owing to the high base of comparison set in Q2 2021.

Investment demand for industrial properties remained strong, accounting for HK$7.0 billion or 44% of total quarterly investment volume. Only 6% (HK$934 million) of Q2 2022 investment volume involved offices, the lowest quarterly share on record.

Property funds remained active, investing HK$3.1 billion in commercial properties this quarter, 19% of which was accounted for by the acquisition of three industrial assets and two hotels. Chinese investors bought a total of HK$6.7 billion worth of assets, the highest since Q3 2018. 

Reeves Yan, Executive Director, Head of Capital Markets, CBRE Hong Kong, said: “H1 2022 saw investment volume decelerate to HK$29.6 billion year-to-date, just 37% of last year’s annual total. In the face of reduced investment appetite caused by a gradual increase in financing costs and myriad economic uncertainties, investors were largely cautious and avoided property sectors with high supply pressure. Industrial remained the most popular asset class. Weak leasing demand and limited room for rental rebound will ensure that office capital value will come under pressure in H2 2022. Higher household mortgage burden will translate into slower growth in local discretionary spending, partly offsetting the potential recovery in tourist consumption. Stabilised shopping malls and hotel blocks, however, will continue to attract long-term investors as the outlook for inbound tourism gradually improves.”