Cross-border investors start scurrying away from Hong Kong

Spooked by persistent high pricing.

According to CBRE, In Hong Kong, investment appetite from cross-border investors appeared weak, as they continued to be impacted by double stamp duty measures and persistent high pricing.

“Although some vendors have softened their stance on asking prices, there is limited pressure for further price cuts given the current low interest rate levels. As such, Hong Kong is quickly losing its attraction to international investors as reflected in the survey,” explained Ms. Ada Choi, Director of CBRE Research Asia.

“Investors are chasing assets or markets that offer higher return or are in the upward cycle elsewhere in the region, such as China and Japan,” she added.

“There remains a considerable level of interests from occupiers and institutions (e.g. insurance) from mainland China who still have strong desire to put their flags in Hong Kong.”

The survey also revealed a number of other interesting trends, including:

• Respondents continued displaying a strong preference towards investing in gateway cities such as Sydney, Tokyo and Shanghai;

• Investors are polarized at both ends of the risk curve; some indicated that opportunistic/value-added is their preferred asset type; others are looking at prime/core whilst relatively fewer opted for secondary assets;

• Investor appetite for secondary assets is increasing, however, as buyers are deterred by the aggressive pricing for prime/core assets and look to capitalize on the pricing gap between core and secondary locations.