HK Property Investment Volume To Rise Up To 15% In 2023
HONG KONG – Market watchers expect real estate investment volume in the Chinese territory would increase by up to 15 percent this year after falling to a 10-year low in 2022, as investors cautiously seek bargains after large price contractions amid rising interest rates, reported the South China Morning Post (SCMP) on Friday afternoon (20 January, SGT).
“With the reopening of the border with mainland China and more reasonable valuations, investors once again find Hong Kong attractive,” commented CBRE’s Executive Director and Research Head in the city, Marcos Chan.
In fact, CBRE’s latest Asia Pacific Investor Intentions Survey conducted in November and December 2022 showed that Hong Kong is the region’s 5th top target city for cross-border investment in 2023.
The city is in the top five for the first time since 2020. Notably, Hong Kong was ranked 8th in 2020, then fell out of the top ten in 2021, before rising to the 6th spot in 2022.
The property consultancy noted that Hong Kong investors had the weakest buying intention among Asia Pacific investors amidst rapidly rising interest rates. Still, the recent price corrections and a rebound in deal-makings are expected to encourage more investment in the Chinese territory.
“Overall investment activity is forecast to accelerate in the second half of the year, as the city shows more signs of a solid recovery,” said CBRE’s Head of capital markets in Hong Kong, Reeves Yan.
“Investors are taking a cautious approach due to continuous interest rate hikes, falling equity prices and a potential economic recession.”
In 2022, property deal volume in Hong Kong nearly halved on an annual basis, with merely 101 major transactions completed – the lowest in the past 10 years, based on data from Colliers. Moreover, the property consultancy revealed that there were at least 6 large foreclosure deals, as the interest rate hikes and a correction in mainland China’s property sector pushed up the number of distressed sales in H2 2022.
Hong Kong’s biggest distressed sale in 2022 was the divestment of the Goldin Financial Global Centre for HK$5.6 billion (US$714.9 million).
“We believe distressed sales will remain (prevalent) in the first quarter of 2023, as they offer bottom-fishing opportunities for investors, especially for cash-rich local investors and family offices,” forecasted Thomas Chak, Colliers’ Co-head of capital markets & investment services.
Meanwhile, Jones Lang LaSalle (JLL) expects overall property investment volume in Hong Kong would rise by 10 to 15 percent year-on-year in 2023.
“Mainland Chinese investors, especially (those linked with) state-owned (entities), began to come to Hong Kong and look for property investment opportunities after the opening of the borders,” noted JLL’s Head of capital markets in Hong Kong, Oscar Chan.
“Singaporean capital is also looking for investment properties in Hong Kong,” he added.