Two-year slump ends as commercial property investment recovers: report

The total number of commercial real estate transactions rebounded by as much as 2.6x YoY.

Hong Kong’s commercial property investment market is showing signs of recovery after a two-year slump, according to a report released by Savills.

Preliminary government data showed that the total number of transactions for commercial properties rebounded in Q1, up by 1.2x QoQ and, 2.6x YoY, to a level that is 85% of the average historical of the first quarter between 2014 and 2018.

Total considerations of en-bloc and substantial-ownership transactions for commercial properties over $100 million each reached about $12.91 billion.

Improved investment sentiment that was seen across all three commercial asset classes was largely supported by softening pricing and the removal of the double stamp duty on non-residential properties that came into effect in November 2020. Investors and end-users continued to seek bargains in the office and retail sectors, which saw pricing declining by 19.4% and 55.9% since the peak.

“Investors and end-users are now on the market looking for bargains across all sectors. It was evidenced by an increasing number of transactions at some strata-titled Grade A office buildings, which was shunned by investors last year. Meanwhile, anticipation resumption of the cross-border travel and low pricing levels have seen an increased investment volume in the retail sector,” said the managing director of the head of investment & sales of Savills Peter Yuen said.