Hong Kong real estate investments continue to disappoint in Q3

Q3 recorded HKD5.3b worth of transactions in Q3, the third lowest investment quarter since 2013.

Despite a growth of 93% QOQ from Q2’s extremely low base, the investment volume of HKD5.3 billion in Q3 was still the third lowest single quarter since Q4 2013. Street shops and strata-title offices were most sought-after by end-users and bottom-fishers with a few distressed deals recorded in Q3.

“The investment market will be further hampered by the sluggish economy and interest rate hike. This means we have further adjusted our transaction volume forecast to HKD26 billion with distressed sales and the hotel sector being the only bright spots for now. To stimulate activity, we’d like to see the Government take action and lift the real estate cooling measures to help enterprises”, said Thomas Chak, Co-head of Capital Markets & Investment Services at Colliers in Hong Kong.

Here’s more from Colliers:

The capital value of general industrial and stratified offices softened in Q3, as did their rents. And as the cap rates remained minuscule, most institutional investors proved elusive. 

While Mainland China and Hong Kong’s recovery is dragging its heels, the US Fed interest rate is unlikely to drop much in 2024. As such, the investment market will remain subdued for the rest of the year. Based on current transaction activity, we have adjusted our 2023 forecast volume to HKD26 billion (-47% YOY). Distressed sales and hotel assets will retain their attractiveness. 

The sluggish economy and interest rate pressure will h mp Ho Ko ’ v m m k d ov business environment. We advise the Hong Kong government to lift property cooling measures, such as relaxing the commercial property LTV ratio and extending the principal moratorium arrangement under the SME Financing Guarantee Scheme, to help enterprises that encounter difficulties.