Chinese Investors Look Beyond Prime Hongkong Offices

Mainland Chinese Investors Look Beyond Prime HK Offices

HONG KONG – CBRE stated that those from mainland China are expected to continue pumping money into the city’s real estate sector, but they are likely to invest in office buildings at non-core districts instead of those situated in prime areas, reported Reuters on Wednesday (7 October).

In Q3 2020, HK$4.4 billion (US$567.75 million) worth of property deals were concluded in Hong Kong. Of this, about 50 percent were acquisitions by investors from mainland China, noted CBRE, which tracks real estate transactions worth over US$10 million.

“There were many enquiries from Chinese investors in the third quarter; they’re looking to invest long term,” CBRE Executive Director for capital markets Reeves Yan told reporters.

However, Q3’s overall transaction volume was the lowest level since Q1 2009, and total sales volume for the first three quarters of HK$18 billion is just one-fourth of the overall tally for the whole of 2019.

Nonetheless, the recent rebound in demand from mainland Chinese property investors was a silver lining amidst the dark clouds. This group had been largely absent during 1H 2020 as they have been discouraged by anti-government protests in 2019 and the succeeding COVID-19 pandemic.

Meanwhile, Cushman & Wakefield (C&W) announced earlier this week that office rents across Hong Kong, one of the most expensive cities in the world, have declined for the sixth straight quarter in Q3 2020.

Specifically, office rents fell 4.7 percent quarter-on-quarter and 13.9 percent year-to-date. But rents of office premises in prime locations are forecasted to plunge by up 25 percent for the entire year.

Aside from that, overall office space given up by tenants hit 626,000 sq ft in the third quarter, with multinational entities from various industries accounting 70 percent of that figure. The amount of available office premises also reached 11.6 percent, which is the highest rate since 2005.

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