Sluggish IPO market cripples Hong Kong’s office property sector in H1

A 20-year low of only HK$17.8 billion was raised in H1.

According to a recent Savills report, the office market in Hong Kong saw more turbulence with the slow IPO market, with only HK$17.8 billion being raised in the first half of 2023, a 20-year low for the first six months of a year. 

“The impact on the Central office market was obvious as fewer IPOs meant less business prospects for investment banks and brokerage firms, in particular those from Mainland with offices in Central, and this was evident by the high correlation between IPO fund raised and Central office rents (0.62) over the past 15 years,” the report said.

Here’s more from Savills:

The good news was as second quarter fundraising rose 55% over the first quarter of 2023, it might bode well for a comeback in the second half of the year, with a few heavyweights rumoured to be listed in Hong Kong, including SF Express, Lalatech (operator of Lalamove and Huolala), Hema Xiansheng, to name a few. 

One bright spot in the finance sector was insurance, with continuous interests from Mainlanders to purchase various insurance policies in Hong Kong, boosting their business prospects, with insurance giants all registering satisfactory results in Q1/2023. 

As such, we noticed a number of relocations and expansions of insurance companies in Tsim Sha Tsui and Kowloon East over the first half of the year to capture the rebounding insurance and wealth management businesses. Another sector with expanding office demand was hedge funds, as many of them made a fortune in this fluctuating stock market and thus expanded their offices in prime Central.