Real estate investment volume jumps 79% to $18b in Q3

Student accommodation conversions attracted $5.3b in investment during the period.

Hong Kong's commercial real estate investment volume surged 79% quarter-on-quarter (QoQ) to $18b in the third quarter (Q3), according to a CBRE report.

The expansion was partly attributed to the growing demand for student accommodation conversions, with investors deploying $5.3b into the sector during the period.

Notable transactions included CapitaLand Investment's $2.3b acquisition of ibis Hong Kong Central & Sheung Wan for conversion, and JD Group's purchase of two hotels in Yau Ma Tei and Wan Chai for a combined $1.03b.

Data centres also attracted investment interest, with Amazon Web Services acquiring iTech Tower 3.1 and iTech Tower 3.2 in Fanling for up to $2.45b, shifting from tenant to asset owner.

CBRE recorded 34 commercial property investment deals exceeding $77m during Q3, including 16 transactions involving financially stressed assets worth a combined $7.8b.

Year-to-date (YTD) investment volume reached $43.2b, equivalent to 94% of the total recorded in 2025.

“The quarter experienced a broader range of investment interest, with non-local private and institutional investors contributing the highest capital in two and a half years,” said Avan Pau, senior director of capital markets at CBRE Hong Kong.

Pau said education-linked properties and data centres had become increasingly attractive to local and global investors. However, higher yield expectations and difficulties securing bank financing continued to weigh on the market.

In the industrial and logistics sector, new leasing volume fell 61% QoQ to 661,700 square feet (sq. ft.) from a high base in Q2.

Despite the decline, YTD leasing volume reached 3.1 million sq. ft., representing 94% of the total recorded in 2025.

CBRE said demand was partly supported by the forced relocation of brownfield operators in the Northern Metropolis, with some businesses moving into purpose-built warehouses.

Amongst the transactions was Kin Keung Transportation Limited's lease of 66,800 sq. ft. at ATL Logistics Centre in Kwai Chung.

Warehouse vacancy declined by 0.2 percentage points to 11.3% during the quarter, supported by positive net absorption of 116,100 sq. ft. However, rents fell another 0.7% QoQ, marking the 11th consecutive quarterly decline.

“The forced relocation demand from brownfield operators also fuelled the market,” said Stanley Yu, senior director of industrial and logistics at CBRE Hong Kong.

“Warehouse vacancy improved but remains at a high level, particularly in and around Kwai Chung, where there is more available space,” Yu added.

The property firm expects lower warehouse rents to continue supporting leasing transactions in Q4, although rental recovery is likely to remain gradual and vary by location and asset quality.