Hong Kong’s real estate investment volumes drop 6.6% to US$ 2.4b

With retail investments accounting for 54% of all transactions.

Jones Lang LaSalle says demand has been driven by strong retail sales growth, with the total value of retail sales growing 27.8% y‑o‑y in April to May.

Here’s more from Jones Lang LaSalle:

Overall, Hong Kong investment volumes were slightly down by 6.6% with investors watching the gap between buyer and seller expectations on yield. Despite this, retail investments have taken an interesting position, as the sector now consists of 54% of all direct transactions and is hitting record‑high prices for several asset types.

Demand has been driven by strong retail sales growth—the total value of retail sales grew 27.8% y‑o‑y in April to May. In addition, the fundamentals remain healthy as rents continue to rise and yields continue to compress naturally.

Three en bloc transactions, two retail and one industrial, dominate the quarter’s largest deals. Unlisted developers Nan Fung Group sold its namesake Nan Fung Plaza in Tseung Wan O for HKD 1,170 million or USD 150 million to The Link REIT. In Kowloon Bay, another namesake transaction was sold. Major conglomerate Emperor Group sold its high‑rise industrial building Emperor International Square to Central Source Limited for HKD 850 million or USD 109
million.

Listed developers Pioneer Global Group acquired The Pemberton, an en bloc office building in Sheung Wan from AEW, US fund for HKD 523 million or USD 67 million.

Generally, transaction volumes are expected to ease to a more sustainable level, as investors waiting to see the effects of thetightening measures on credit in China in limiting the flow of Chinese capital into Hong Kong.

However, rising rents in retail and limited investment grade property in core districts will drive investors into the retail sector, particularly traditional prime shopping areas such as Mongkok and Causeway Bay. Already in 3Q11, Singapore’s Mapletree Investments purchased Festival Walk in Kowloon in a mammoth HKD 18.8 billion or USD 2.2 billion deal.

Photo from jamehand

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