HK Sees Flurry Of Office Sales After Owners Agreed To Price Cuts
HONG KONG – The city’s commercial property market is manifesting signs of life as a recent series of deals, particularly the HK$9.84 billion (US$1.27 billion) sale of the CityPlaza One office building, indicate growing investor confidence, reported Mingtiandi on Monday afternoon (16 November, SGT).
After transactions fell sharply by 62 percent year-on-year during the first 3 quarters, Hong Kong has witnessed more commercial real estate transactions lately, following positive news from the stock markets and on the COVID-19 vaccine.
“It’s not a sudden spike. It’s more like an accumulation of pent-up demand, similar to the residential market,” said Colliers International’s Head of Valuation & Advisory Services, Hannah Jeong.
Jeong and other property experts credit the rebound in commercial deals to a growing willingness among property owners to divest their assets at discounts. Moreover, the rumour that the authorities are about to waive a tax on non-residential property transactions is enticing buyers to return to the market.
Last week, Swire Properties sold the 21-storey City Plaza One office tower to Schroders Pamfleet and Gaw Capital Partners for about HK$15,609 psf. The price translates to an 18 percent discount compared to the figure achieved when Swire disposed CityPlaza Three and CityPlaza Four to Hengli Investments Holding and Gaw Capital Partners in 2018.
While the City Plaza One deal represents the biggest sale of a completed property in Hong Kong so far this year, some experts consider it as a sign that prices are declining in the most expensive property market in the world.
Apart from that widely reported news, the city also saw a flurry of smaller transactions, most of which were signed after owners consented to significant price cuts.
For example, investor David Chan continued to divest his assets in The Center by selling 2 units collectively measuring 4,000 sq ft for about HK$126 million (HK$32,000 psf), revealed real estate consultancy Midland IC&I. Notably, the business mogul, who is called the “King of Cassettes”, agreed to a 30 percent discount, based on local media reports.
Commenting on the price reductions, Jeong said “there isn’t going to be a quick recovery, not in the next six to 12 months, so vendors are starting to accept reality.”
“I think the liquidity was always there, but people are looking for better deals. As long as sellers are willing to cut prices, there will be buyers,” she added.
On the rumours that the government may consider repealing the double stamp duty on commercial and industrial property sales, Jeong thinks that it’s unlikely to happen. Nevertheless, it’s possible that the authorities could introduce other measures to help the commercial property market, particular the retail sector, where asset sales have fared worse than the office segment.