Hong Kong real estate investment deals hit record lows since 2008

There were only 16 deals recorded in Q2.

In a recent report, CBRE noted that the one-month HIBOR decreased from 3.73% on 31 March 2025 to 0.72% on 30 June 2025 amid the weakened Hong Kong dollar, despite Hong Kong’s Best Lending Rate being unchanged at 5.25% - 5.50%.

“However, lower rates failed to spur a significant jump in investment demand. While investment volume improved over the quarter, it was mainly underpinned by a single sizable deal,” the report added.

Here’s more from CBRE:

Total investment volume (deals involving commercial real estate over HK$77 million) increased 45% quarter-on-quarter to HK$8.7 billion in Q2 2025. However the total of HK$14.7 billion reached in H1 2025 was just 34% of the full-year total for 2024.

Notable transactions in Q2 2025 included Hong Kong Stock Exchange purchasing multiple floors in One Exchange Square from Hongkong Land for a total of HK$6.3 billion for self-use; a deal which accounted for 73% of the quarter’s total investment value.

Another major deal saw a mainland investor completed the en-bloc purchase of PARK AURA for HK$650 million for self-use. End-users accounted for 84% of total investment value during the quarter.

Despite the quarter-on-quarter increase in total investment volume, only 16 deals were recorded in Q2 2025, the lowest since Q4 2008. Half involved financially stressed assets indicating that some sellers remain under pressure and are struggling to fulfil loan covenants.

During the quarter, the government announced that it would launch a pilot scheme in July 2025 to relax planning rules for landlords seeking to convert offices and hotels into student accommodation. However, no hotel transactions were recorded during the quarter.

Reeves Yan, Executive Director, Head of Capital Markets, CBRE Hong Kong, said that amid ongoing economic headwinds, investors adopted a cautious, wait-and-see approach, and the lower HIBOR provided only limited support. However, sentiment showed signs of stabilisation, particularly with increased enquiries from end-users, triggered by the continuous decline in capital values and reduced cost of borrowing. 

“Investment momentum is anticipated to gradually improve in H2 2025, subject to the HIBOR remaining low. As banks increase their exposure to financially distressed loans, the availability of discounted assets will improve. Combined with lower interest rates, this should encourage more purchases from end-users and long-term investors. Following the Government’s recent announcement of a pilot scheme to streamline hotel-to-dormitory conversions, we expect to see a noticeable uptick in interest from hotel owners and office landlords exploring such opportunities,” Yan added.