Relaxation of measures unable to lift real estate investment sales: Savills

In Q4, commercial investment volumes contracted by 44.3% YoY.

Hong Kong’s more relaxed COVID restrictions were unable to lift the city’s real estate investment sales, data from Savills showed.

According to Savills, the relaxations did not offset the “headwinds from a global economic slowdown and rising interest rates.” 

In Q4, commercial investment volumes across the retail, industrial, office and hotel sectors, excluding land sales and deals worth over US$10m,  contracted by 2.5% QoQ and by 44.3% YoY in Q422.

Savills, however, believes that the border reopening will have a good impact on investment sales moving forward, adding that it will trigger some “office leasing demand from wealth management firms and insurance companies to return in early 2023.”

But given the persistent rental declines of -1.5% to -3.5% across all districts in Q422, higher levels of vacancy of 10.4% in Q422, as well as abundant new office supply in
in 2023 and 2024, Savills said Grade A office rents will likely fall by 10% in 2023.

On retail, Savills said it does not expect to see any significant changes in the first half of 2023 since it will take time before travellers return to Hong Kong in numbers.