Comparisons Between Singapore & Hong Kong's Commercial Property Markets

Comparisons Between Singapore & Hong Kong’s Commercial Property Markets One Theme To Watch Out For In 2023

HONG KONG – A real estate expert thinks that 1 of the 4 themes to watch out for in Asia’s commercial property sector next year as China reopens is the comparison between Singapore and the Chinese territory, according to a commentary published on the South China Morning Post (SCMP) on Monday evening (2 January, SGT).

The other 3 themes are the importance of diversification, the rising appeal of retail and hotel assets, as well as the opportunities for cross-border real estate investments.

According to Nicholas Spiro, a Partner at Lauressa Advisory, comparisons between Singapore and Hong Kong have proliferated over the past few years partly because of the polar-opposite strategies these markets have adopted in tackling the COVID-19 pandemic.

“Singapore, which began opening up in 2021, has bolstered its appeal in the eyes of international investors and emerged as one of the best performing property markets in Asia” after the city-state shifted its policy to living with the virus compared to Hong Kong’s zero COVID strategy.

“The scale of the outperformance is striking. In the office sector – which is under intense pressure the world over mainly due to the pandemic-induced shift to hybrid working – rents for grade A buildings in Singapore’s core central business district are close to a record high, while the vacancy rate stands at a mere 3 percent due to a persistent lack of supply,” Spiro noted.

However, he argued that while the fundamentals of Hong Kong’s office sector is significantly weaker at present, no other market in the region stands to benefit from the reopening of mainland China.

“The unsealing of the territory’s border with the mainland, which will begin on 8 January, is the long-awaited catalyst for a meaningful recovery and part of what is likely to be one of the most important tailwinds for Asian real estate this year. While China’s sudden reopening will be unsettling and turbulent for some time, it will provide a major fillip to Hong Kong,” Spiro explained.

His comments come after Hong Kong-based Link REIT, the biggest real estate investment trust in Asia, made its maiden acquisition in Singapore by picking up two shopping centres there, namely Jurong Point and Swing By @ Thomson Plaza. With a combined selling price of US$1.6 billion, this makes it the biggest commercial property deal in the city-state for the whole of 2022.

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