Capital market recovery stays slow amidst Fed interest hike: Colliers

Total investment volume for the first half of 2022 was down by 15%.

The capital market recovery in Hong Kong stayed slow, partially due to the US Federal Reserve interest rate hike, with some investors adopting a wait-and-see approach on investing for commercial properties, Colliers said.

Te recorded total investment volume for commercial assets declined 15% year-on-year in the first half (H1) of 2022 to $28.9b. This, despite the increase of investment volume for commercial properties by 52% in the first quarter of 2022.

“Residential development sites and co-living assets offer opportunities to local developers and funds whilst neighbourhood retail will continue to gain traction in the second half (H2) of this year given its resilient performance,” Colliers said on the pent-up demand for the housing sector. 

Meanwhile, institutional funds and real estate firms, which accounted for 87% of the investment volume in the second quarter, should remain the key market driver for the rest of 2022, Colliers also said.

As potential interest rate hikes may burden landlords, Colliers is seeing more investment stocks launched in the market for sale, which will drive more transactions in H2 2022.

If there are no further lockdowns in the city, Colliers maintained its forecast to see transaction volumes of 5% down year-on-year in 2022.