H. Kong commercial property market dips to historic low

Hong Kong’s commercial property market is facing a downturn, with only 48 transactions in the first half of 2024, the lowest since 2008. This decline is attributed to increasing interest rates and poor market sentiment.

According to real estate services firm CBRE Group Inc., financially stressed assets dominated the market, accounting for a staggering HK$16.8 billion ($2.15 billion) or 73 per cent of all deals completed.

Reeves Yan, CBRE Hong Kong’s Head of Capital Markets anticipated more distressed sellers due to financial pressures. He also predicted a possible interest rate reduction by the US Federal Reserve post-September.

“We can expect to see an increase in distressed sellers facing financial pressure,” commented Reeves Yan, Head of Capital Markets at CBRE Hong Kong, during a recent press conference. He further projected a potential interest rate cut by the US Federal Reserve later in the year (after September).

Local investors, including family offices, were the main buyers in 45 per cent of transactions. CBRE predicts a 5-10 per cent decrease in Grade-A office property values and a potential five per cent drop in warehouse values.

Attribution: Bloomberg