Hong Kong Property Sales Plunge To 19-year Low
HONG KONG – Just released data from Colliers revealed that the sales of commercial properties and residential buildings in the city during the 2nd quarter plummeted to merely HK$2.7 billion (US$345 million), the lowest in 19 years, reported Bloomberg on Wednesday evening (12 July, SGT).
The sharp decline in real estate transactions occurred as rising interest rates impacted Hong Kong’s property market.
However, the primary reason for the weak performance was a dearth of deals involving office properties and industrial premises, noted Colliers’ Co-head of capital markets & investment services in Hong Kong, Thomas Chak.
“Investors are expected to remain prudent in the coming months, affected by the sluggish mainland Chinese economy and anticipated further rate hike by the US Federal Reserve in the second half,” he forecasted.
According to Colliers, Hong Kong’s office market remains under pressure with a high overall office vacancy level of around 15 percent.
Besides that, the real estate consultancy disclosed that office rents in the city dipped by 2 percent during the 1st half of the year, even though Hong Kong’s border with mainland China reopened at the start of 2023.
Generally, demand for industrial properties such as warehouses is more resilient than that for office space. However, the prevailing high interest rates have put off real estate investors over the past few months as the rental yield failed to keep up with the higher borrowing costs, Chak explained.
Looking ahead, Colliers expects that total property investment in Hong Kong would plummet by about 50 percent to HK$35 billion for the entire year, with the capital values of both office assets and industrial premises projected to drop.
