Commercial property sales volume fell 70% in Q2

This comes as economic recession and local political turmoil weighed on buyers’ decisions.

Commercial property volume in the local market declined by 70% YoY in Q2, with 82% of deals closed at $30m or below, according to a report from Savills. New World has continued to sell down non-core assets with over $6.6b of asset or income shares offloaded in H1.

This comes as an economic recession, virus uncertainties as well as local political turmoil all weighed on buyers’ decisions.

Potential purchasers in the office market were mainly local investors and old families sitting on cash looking for discounted stock. Some assets for the few deals closed in core areas at 20%+ discounts were held by Mainland companies and are now facing financial distress.

Meanwhile, persistently low interest rates as well as low levels of near-term commercial supply remain the two supporting pillars of the commercial market. The rebounding stock market and robust IPO pipeline will likely boost office demand over the next few months, whilst travel relaxations as well as incentives from both government and businesses may reinvigorate retail interest among both local shoppers and visitors.

Nevertheless, a deepening economic recession, local political uncertainties, macroeconomic turbulence as well as the possible resurgence of the virus are all factors which may negatively impact property investment sentiment over the next six months.