Real estate transactions in Hong Kong experienced a decline in May, reaching a three-month low.
In a marked shift, property transactions in Hong Kong plummeted to a three-month low in May 2021, as apprehension reigns amid escalating US-China tensions, turbulent stock markets, and pervasive economic uncertainties. The decline was evident across all property types, including homes, offices, shops, parking spaces, and industrial units.
The number of transactions dropped a steep 11% from the previous month, recording a meager 6,442 deals, the lowest since February. The value of these transactions followed suit, sliding 0.5% to HK$49.8 billion (US$6.3 billion).
Last month's top deal involved Hong Kong Exchanges & Clearing's purchase of office and retail space in One Exchange Square and related assets in Central for HK$6.3 billion, as noted by Centaline Property.
Despite the economic challenges, commercial property owners continue to offload their assets at a loss, primarily due to the allure of the declining Hong Kong Interbank Offered Rate (Hibor), which has drawn in investors.
Edwin Lee, the founder of Bridgeway Prime Shop Fund Management, sold 10 street-level shops in the previous three months at losses ranging between 12.8% and 43.5%, he revealed on Monday.
These market trends are not isolated to May 2021. Rather, they have been on the rise over the past few years, fueled by ongoing pressures such as market volatility, economic uncertainty, declining property values, and narrowing bank margins.
In light of these challenging conditions, property funds and investors focused on retail and commercial real estate have been forced to sell their assets at a loss, reflecting their urgent need to exit and the shrinking demand due to the extended slump in property prices.
- The decline in property transactions in Hong Kong has extended beyond May 2021, as ongoing pressures in the industry, such as market volatility and economic uncertainty, have led investors to divest from retail and commercial real estate, including offices and shops, despite the losses.
- Amidst the economic challenges, the finance sector's attraction towards the declining Hong Kong Interbank Offered Rate (Hibor) has motivated commercial property owners to sell their industrial units and other assets at a loss, in an attempt to draw in investors who are keen on finance and investing.
