Hong Kong real estate investment drops to second-lowest half-year total since 2008

Commercial investments reached HK$23.1b in H1 2024.

According to data from CBRE, commercial real estate investment volume (deals worth over HK$77 million) in Hong Kong fell 52.5% quarter-on-quarter to HK$7.4 billion this quarter. 

This brought the total for H1 2024 to HK$23.1 billion, the second-lowest half-year total since H2 2008. 

Here’s more from CBRE:

During H1 2024, the highlight was on financially-stressed assets where sellers dispose to fulfill loan covenants. Financially-stressed assets accounted for HK$16.8 billion of the investment volume or 73% of the total investment volume in H1 2024.

Only 48 deals were closed in H1 2024, the least for a half-yearly period since H2 2008. Of these transactions, 35 (or 73% by number of count) involved a lump sum of less than HK$300 million.

Amid the small number of deals, office still accounts for the most transactions (15 transactions). Retail was slow with only 10 retail deals in H1 2024. 

The investment market is still dominated by local investors by number of deals (22 transactions or 45% of H1 2024’s total count of 48). Local investors and end-users mostly bought office floors.

Reeves Yan, Executive Director, Head of Capital Markets, CBRE Hong Kong: “The investment market has entered a slower phase, as impacted by high financing costs, negative carry positions and uncertain global geopolitical tensions. The market was supported by just a few larger deals in Q1, followed by an increase in smaller-sized deals in Q2 with local investors and developers remaining the major buyers. Over the past 12 to 18 months, student accommodation has emerged as a popular sector for institutional investors, with en-bloc hotels or apartment blocks being acquired for conversion into student accommodation. While most investors continued to adopt a wait-and-see attitude under the high interest rate environment, some long-term-minded family offices continue to invest in office assets.”