COMMERCIAL PROPERTY | Staff Reporter, Hong Kong

Commercial property investment market only scored US$10m in deals

This is the lowest in almost 8 years.

The commercial real estate investment market slowed in momentum in 2016, with only 187 deals worth US$10m or more (excluding pure land sales and internal transfer transactions) – the lowest since 2009, according to CBRE.

However, large deals worth over HK$1b continued to play a key role, contributing 51% of the investment volume and bringing the full-year figure for total transactions to HK$85b.

Office premises remained the most sought-after asset class, supported by strong corporate end-user and investment demand from Mainland Chinese corporate buyers. Sales of retail premises remained weak, partly due to landlords’ firm stance despite subdued leasing demand and falling rents.

Here's more from CBRE:

“Compared to other markets in Asia Pacific, Hong Kong remained relatively attractive to institutional funds, in terms of currency risk, taxation system and liquidity in the market,” said Stanley Wong, Executive Director, Capital Markets, CBRE Hong Kong. “Institutional fund activities are expected to be robust in Hong Kong 2017 as they shift their focus from the investment market in mainland China back to Hong Kong.”

In 2017, low vacancy and sustained interests from end-users and investors will continue to support capital values across the commercial property markets. In addition to office premises, which are expected to remain sought after, industrial properties suitable for end-users or those with redevelopment potential will continue to be in great demand.

Meanwhile, retail property investors are expected to remain active in neighborhood areas rather than core retail locations.

“Supply and demand factors in a number of commercial property subsectors suggest that the market as a whole will not see a significant downturn in rentals or capital values either,” said Tom Gaffney, Managing Director, CBRE Hong Kong, Taiwan and Macau. “Based on currently available information, we believe 2017 will be a stable year and, if current global and domestic macroeconomic uncertainties can be resolved, we may see some modest growth, particularly in the second half of the year.”

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