Property investment market slumps as investors stay cautious

Office and retail transactions declined from the previous quarter’s high base. 

Hong Kong's property investment market began 2025 on a somber note, with investors holding back amidst uncertainty over the timing of interest rate cuts, according to Colliers'  latest Q1 2025 Quarterly Market Report.

Total transaction value fell 36% quarter-on-quarter to $6.3b in the first quarter.

Hotel assets accounted for the largest share of activity, making up 45% of total transaction value at over $2.8b. 

Office and retail transactions declined from the previous quarter’s high base. 
Capital loss and mortgagee sales continued to be key drivers of investment activity.

Capital values of office and industrial assets dropped 1.1% and 1.2% year-on-year, respectively. 

The office sector is expected to see a further capital value decline of 5% to 10% by the end of the year.

“Whilst market consensus remains optimistic on the Fed rate cuts, decline in local borrowing cost may occur around mid-year coinciding with banks continuing to sell repossessed properties, presenting opportunities for potential buyers,” said Thomas Chak, head of Capital Markets & Investment Services at Colliers Hong Kong.

“Additionally, local education institutions will significantly increase the enrollment of non-local students in the coming academic year, giving rise to more transactions in the education sphere including student accommodation, learning centres and campuses,” Chak added.