Overseas real estate investments fell 31% to $40.79b in H1

Total commercial real estate capital deployed to Singapore hit $10.96b.

Hong Kong’s overseas real estate investments crashed 31% YoY to $40.79b in H1 as downward pressure continued to mount, according to a report by Cushman & Wakefield (C&W). This marks the sixth consecutive quarter that outbound investments from Hong Kong fell in terms of YoY growth compared per quarter, with only $18.1b worth of deals in Q2.

Of this number, a total of $10.96b Hong Kong-based investments were deployed in Singapore’s commercial real estate market with the value of transactions hitting $23.56b in H1 as investors turned to the nearby city state for its stable political environment and relatively strong rentals.

Also read: Hong Kong still top APAC real estate investment market in H1

Key transactions during the period include the $710m purchase by Gaw Capital Partners of Robinson 77 in February. Gaw Capital also led a consortium including Allianz to buy DUO office and retail space for $8.93b. Another Hong Kong investor, Arch Capital Management completed the purchase of Anson House at $1.19b in August.

“Some of these Hong Kong investors and funds have been active in Singapore for some time but the advent of the political situation in Hong Kong has coincided with more high net-worth individuals and family offices from Hong Kong enquiring on potential purchases,” said Christine Li, head of research for Singapore and Southeast Asia.

“Singapore started to attract increased attention from Hong Kong investors and may increasingly be viewed as a comparatively safe haven given the challenges some other global destinations are facing,” added James Shepherd, head of research for C&W Asia Pacific.

C&W also noted an increasing interest in Singapore’s retail assets by Hong Kong investors with the recent acquisition of Chinatown Point Mall by Pan Asia Realty Advisors, a joint venture between Mitsubishi Estate and Hong Kong-headquartered CLSA Capital, for $2.94b.

Also read: Commercial real estate investment jumped 40% to $204.09b in 2018

Apart from Hong Kong investors, Mainland Chinese buyers have also zeroed in on Singapore. The Place Holdings, backed by China’s The Place Investment Group, recently bought Realty Centre for $841.7m from a commercial collective sale deal.

The deal came amidst the mainland chinese real estate investment overseas (MCREIO) plunging to a seven-year low of $29.81b in the first half of 2019, falling 68% YoY due to restrictive outbound investment policies and a tightening lending environment.

"H1 2019 MCREIO transaction volume fell to its lowest point since 2012. Traditionally favoured destinations such as the U. and the UK have remained quiet as trade friction and Brexit uncertainty has rolled on,” noted Shepherd.

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