Hong Kong’s Commercial Real Estate Market in Crisis: Global Exodus, High Interest Rates, and the Struggle to Sell Amidst Dwindling Valuations

The business real estate sector in Hong Kong is experiencing a tough time, with everyone feeling the pinch. The city's commercial property market is facing several challenges, such as the departure of international companies and surging interest rates.

In the second installment of a two-part series, Jiaxing Li, Aileen Chuang, and Salina Li delve into the impact of elevated interest rates and various other elements on the urban commercial real estate market.

At the center of Causeway Bay, a vibrant shopping area in Hong Kong that used to be pricier than Midtown Manhattan's Fifth Avenue, a commercial property with unstable financial backing has recently been put up for sale.

As the deadline approaches, the proprietors are under stress to dispose of the property in order to pay back the loan. The auction for the skyscraper, currently with over one-third of its levels unoccupied, kicked off last month. The starting bid was HK$1.4 billion (US$180 million), which is almost 30% less than its highest estimated value of HK$2 billion.

The repercussions have spread extensively, affecting everyone from property tycoons to astute local investors. Meanwhile, banks, wary of providing loans, are stuck with a collection of unpaid debts – which are on the increase.