Hong Kong real estate investment volumes to hit HKD50 billion this year

This represents a 37% increase from 2023’s low base.

The overall real estate investment market in Hong Kong was subdued in 2023 with only 65 major meals concluded with a total volume of HKD 37 billion, the lowest since the financial crisis in 2008 and also a 28% YoY drop, according to a report from Colliers. The interest rate hike and the slower-than-expected economic recovery all contributed to the weakened investment market. 

Data from Colliers reveal that amongst various asset classes, retail, hotel and office sectors were boosted most significantly, with 57% of the total investment volume attributed to the office sector, thanks to several big deals in Q4 2023. The capital value of general industrial and stratified offices declined by 0.7% QoQ and 1.0% QoQ respectively, whereas high-street retail price also dropped by 0.4% QoQ in Q4 2023.

According to Thomas Chak, Co-Head of Capital Markets & Investment Services at Colliers Hong Kong, institutional investors who are rate-sensitive looked for assets yielding over 4%. Throughout 2023, funds only accounted for 9% while end-users contributed for about 40% of investment volume. 

While the market expects the U.S. Federal funds interest rate to stabilise in the next six to nine months, coupled with the government’s initiatives on “Headquarters Economy” and the Capital Investment Entrant Scheme, this will likely improve investment sentiment and re-establish Hong Kong as an investment destination. 

“We forecast investment volumes to grow by 37% YoY, from 2023’s low base, to HKD50 billion this year. Accommodation assets will continue to benefit from the inflow of talent and mainland Chinese students, while retail sector outlook remains positive amidst a stable tourism recovery, giving a 5% to 8% growth to the capital values,” Chak added.