Hong Kong Commercial Property Investment Spikes 23 Percent in 2021

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Retail and industrial real estate will remain a key investment focus in the second quarter

According to new research from JLL, total Hong Kong investment in commercial real estate valued at over HKD 20 million in the first quarter of this year rose 22.6% year over year to HKD 12.5 billion as the Covid-19 pandemic eased . It reflects the market sentiment, which improved in the first quarter from a year earlier.

Retail property sales were the most active among commercial property in the first quarter. Around 57% of the total investment in commercial real estate valued at HKD 100 million or more was in retail real estate.

The proportion of retail stores rose to around 61.2% if you included sales of commercial property worth HKD 20 million or more. Total retail real estate investment worth HKD 100 million or more increased 15.4% year over year. The growth is even more noticeable when factoring in retail property sales valued at HKD 20 million or more, up 33.7% year over year.

Commercial property was another market focus in the first quarter. Other overseas institutional investors are in the industrial sector and Goodman Asia is acquiring two properties from Samson Paper Company Limited for over HKD 750 million. Silkroad Property Partners also bought the Smile Center in Fanling for HKD 321 million.

In the office investment market, office transaction volume declined 89.1% from the previous quarter, based on transactions valued at HKD 100 million or more. The decrease was mainly due to the lack of major transactions.

Oscar Chan, Head of Capital Markets at JLL in Hong Kong, said: “The investment market was driven by retail property sales in the last quarter, particularly retail properties in non-shopping areas. Investors are keen to buy retail properties as retail rents are in the fourth quarter of 2003 72% down from top of the market to rental levels and expected to stabilize. They believe the time is likely to be the right time to buy retail property as asking prices have come down and retail rents are expected to rebound. “

“As the outbreak subsides, overseas mutual funds are returning to the Hong Kong real estate investment market with multiple industrial properties acquired. Looking ahead, as the city returns to normal along with the ongoing vaccination program, we expect larger deals in Q2. Retail and Investors should continue to focus on industrial real estate, “he added.

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