Bright Spots In Asia’s Commercial Property Markets

Singapore, Hong Kong Bright Spots In Asia’s Commercial Property Markets

HONG KONG – Statistics from financial data firm MSCI showed that Singapore and Hong Kong were the only markets in Asia Pacific that saw positive growth in commercial property deals in Q1 2023 on a quarterly basis, reported the South China Morning Post on Friday evening (12 May, SGT).

In Hong Kong, commercial real estate (CRE) transactions rose by 15 percent quarter-on-quarter to US$2.6 billion during the first three months of the year, but it slumped by 40 percent on a year-on-year basis.

In comparison, that in Singapore surged by 40 percent quarter-on-quarter and 18 percent on an annual basis to US$3.7 billion.

The two rival commercial hubs were the “bright spots” in the region’s commercial property markets, unlike other markets which recorded quarterly slumps. For instance, in Australia, Japan, South Korea, and mainland China, deals declined by about 33 percent to 78 percent. Year-on-year, these four markets saw contractions of between 19 percent and 47 percent as per figures from MSCI.

“Trading of commercial property slumped in the first quarter of 2023 to the lowest total in over a decade, extending the downturn seen in the second half of 2022, due to rising interest rates and an unsettled picture on pricing,” stated the data provider in a report.

“Of the major markets, only Singapore and Hong Kong were the main bright spots, each boosted by megadeals.” While the two cities appear to be doing okay amidst the present uncertainties, the two markets are actually in very different conditions, explained real estate consultancy CBRE.

In particular, “deal volume growth [in Hong Kong] was partly contributed by some distressed or motivated sellers. But it is a relatively small portion and not largely driven by those,” noted CBRE Hong Kong’s Head of capital markets Reeves Yan.

“The deal volume growth is largely driven by the border opening with incoming [mainland Chinese] and international capital,” he added.

One of the biggest commercial property transactions during Q1 2023 in the Chinese territory was PAG and Mapletree Investments’ HK$5.6 billion (US$715 million) acquisition of a 28-storey office tower in the Kowloon Bay that was previously the HQ of debt-laden Chinese developer Goldin Financial Holdings.

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