Business
Hong Kong’s Commercial Property Market Sees Rise in Investment Despite Falling Prices Amid Supply Glut Concerns: Insights from CBRE
Concerns over surplus supply are expected to further drive down the prices of commercial properties in Hong Kong, according to CBRE. The company reported a 22.6% increase in the investment volume of commercial real estate in the third quarter, reaching a total of US$1.28 billion.
"There's a growing attraction towards high-value transactions in the market since the commencement of the rate cut. This, along with significant price reductions, is instilling confidence in end users and long-term investors to start purchasing," stated Reeves Yan, the executive director and chief of capital markets at the commercial property firm.
"Yan stated that potential reductions in interest rates and additional financial relaxation in mainland China's economy could lead to an upswing in the stock market and enhance the outlook of the investment market in the upcoming months."
During the third quarter, there was a 22.6% increase in commercial property investments, reaching HK$9.97 billion (US$1.28 billion), according to the report. Assets under financial strain made up HK$5.5 billion of the investment volume, representing 55% of the quarter's total. This indicates the ongoing pressure on sellers to meet their loan agreements.
CBRE reported that in the third quarter, only 25 commercial real estate deals exceeded a value of HK$77 million, with the majority of transactions being of a lesser value.
"The majority of agreements were of a smaller scale, with 15 transactions involving a total amount less than HK$300 million," was stated.
Yan reported that Commercial Real Estate (CRE) mortgage rates were approximately 6% in the third quarter, a decrease from the 7% seen in the same period the previous year. However, returns on property investments remained under 4%.
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