Investment market sentiment underpinned by impressive land sale results

Over $50b worth of commercial property assets was transacted.

Hong Kong’s investment market sentiment strengthened in 1H 2017 thanks to overwhelming land sale results and well-received residential site launches. Capital values continued to break record highs through the first six months while government land tenders also fetched over HK$100 billion, according to CBRE.

Over HK$50 billion worth of commercial property assets (priced over US$10 million) was transacted in 1H 2017, translating to 58% of last year’s total investment value.

Here's more from CBRE:

The leasing momentum in Hong Kong’s office sector also picked up in 1H 2017, with net absorption at 224k sq. ft. by the end of the first six months of 2017, equivalent to around 60% of the full-year figure in 2016.

Low vacancy levels continued to push Central rents higher, up 3.3% in Q1 and Q2 combined. While rents across Hong Kong are at new record high levels overall, Central rents are still 6.3% lower than the peak recorded in 2008.

The opening of new MTR lines helped spur office leasing activity in decentralized areas such as Wong Chuk Hang and Hung Hom while higher space availability in Kowloon East continued to place moderate pressure on rents in Kowloon Bay and Kwun Tong.

The retail market continued to see signs of stabilization in 1H 2017. While retailers were generally more positive in the first six months than in 2016, they are not yet ready to resume expansion plans.

Downward pressure on retail rents reduced, with high street shop rents edging down a further 2.5% in the first half, a significant slowdown from the 11.5% decline for the full year of 2016.