Tokenisation, tech pushed to revive property market

It could cut transaction costs by as much as 30%.

Hong Kong should explore tokenisation of properties to spark activity in its struggling commercial property market, an industry analyst said.

“Property illiquidity hinders deals,” Kwan Chit Chiu, senior manager at Savills (Hong Kong) Ltd., told Hong Kong Business. “Blockchain and real-world asset tokenisation can raise capital via fractional ownership.”

He added that tokenisation could cut transaction costs by as much as 30%.

Commercial property investment reached $14.7b in the first half—a third of 2024’s full-year total—underscoring the market slowdown, according to data from CBRE Group, Inc.

Kwan cited Shanghai-based Seazen Group Ltd., which issued nonfungible tokens (NFT) tied to its Wuyue Plaza shopping mall, raising $10b to $20b in funding. He also cited Project Victoria in Hong Kong, which tokenised property-related claims such as liens.

Ripple Labs, Inc. and Fubon Bank (Hong Kong) Ltd. carried out the pilot under the Hong Kong Monetary Authority’s e-HKD initiative, using tokenised liens as collateral for home equity loans with disbursements in trial digital Hong Kong dollars.

“This minimum viable product demonstrated efficient equity release, combining tokenised assets with lending protocols to unlock liquidity for owners and streamline bank operations, reducing cycles from weeks to days while ensuring atomic settlements and compliance,” Kwan said in an emailed reply to questions.

Tokenisation of real-world assets is expanding globally, with the Asia-Pacific region expected to account for $65b in tokenised assets this year.

Still, Hong Kong faces regulatory headwinds after the China Securities Regulatory Commission advised against real-world asset tokenisation in September, citing “policy alignment needs.”

Despite this, Kwan argued that tokenisation could fast-track deal closings, cut errors, promote transparency via traceable histories, mitigate risks through smart contracts, and provide global liquidity access.

He added that Hong Kong could harness data analytics and artificial intelligence (AI) to better predict buyer demand and price properties more accurately.

Closing valuation gaps

Persistent valuation gaps between buyers and sellers remain a major barrier to transactions.

“These can be addressed through transparent communication and leveraging technology for updated market data,” Oscar Chan, head of capital markets at Jones Lang LaSalle, Inc. (JLL Hong Kong), said in an email.

Chan also cited the need for “proactive market education” to align expectations on both sides of a deal.

Jarrod Mongston, associate director for office services at Cushman & Wakefield (HK) Ltd., said there can be challenges with managing client expectations as occupiers often rely on incomplete or misleading market signals.

“For example, the Grade-A rental market may have dropped considerably from the recent peak, but Prime grade buildings
are still in high demand, often with competition to lease the space,” said Mongston.

“Accurate, relevant and timely data, as Hong Kong is a volatile marketplace, is key to managing expectations.” He said greater transparency would support smoother transactions.

Some landlords, he added, conceal lease terms through “side letters” and nondisclosure agreements, which undermines transparency and weakens tenants’ negotiating position, that is where a trusted and qualified tenant representative advisor comes into their own, helping occupiers navigate such practices, he added.

For investors, measurable returns remain a top concern. CBRE Hong Kong Executive Director and Head of Capital Markets Reeves Yan said agents must build solid improvement plans to demonstrate value-add potential.

“A common challenge is justifying rental growth in the near future,” he said in an emailed reply to questions. He noted that several sectors, including offices, are under pressure from supply-demand imbalances.

Even so, the office market could regain momentum once financial sentiment stabilises, said Michael Ip, manager for capital markets and investment services at Colliers Hong Kong.

Government initiatives such as “Hostel in the City,” which converts office space into student housing, are also supporting the sector, Kwan said. Leasing activity has picked up, led by expansions by insurance firms and wealth management divisions of commercial banks.

Notable deals included FWD Group Holdings Ltd. leasing 330,000 square feet at Devon House and HSBC Holdings Plc opening a 23,000-square-foot wealth centre on the 99th floor of the International Commerce Centre.

Yan expects more real estate transactions from late 2025 into 2026, helped by possible interest rate cuts and a stronger stock market.

“We are seeing more capital flowing into the Hong Kong market and benefiting real estate investment,” he said. “With stabilised residential prices and increasing demand from mainland buyers, we are confident that the market will see more deals in the next six months.”

Ip added that the reduction in the investment visa scheme’s minimum residential transaction threshold—from $50 million to $30 million—would attract more high-net-worth investors from mainland China and overseas.