Investment in Hong Kong real estate hit a 15-year low last year, but is expected to pick up in 2024, according to Colliers

“Markets expect US Federal Reserve interest rates to stabilize over the next six to nine months; [Hong Kong] Government initiatives [such as] “Headquarters economy” and capital investment entry scheme [CIES]This is likely to improve investment sentiment and re-establish Hong Kong as an investment destination,” said Thomas Chak, co-head of capital markets and investment services at Colliers Hong Kong.

The big deal struck last year as borrowing costs surged to a 22-year high as the Hong Kong Monetary Authority (HKMA) raised interest rates by a cumulative 5.25% since March 2022 to maintain the local currency’s peg with the US. There were only 65 cases. dollar. The HKMA needs to act in line with the US Federal Reserve, which is running an aggressive campaign against rampant inflation in the world’s largest economy.

Colliers said institutional funds accounted for just 9% of deals last year, with end users contributing about 40%. Data from 2019 to 2022 shows that funds account for 18% to 46% of total investments in Hong Kong.

“Institutional investors who are sensitive to interest rates were looking for assets with yields above 4%,” Chak said.

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As part of CIES, investors can invest up to HK$10 million in commercial and/or industrial real estate assets in Hong Kong. The scheme “will definitely attract investors to diversify their investment portfolios and ultimately increase trading volumes in the commercial market as a whole,” Chak said.

He added that the Headquarters Economy initiative, which aims to attract companies from outside Hong Kong to set up headquarters in Hong Kong, could benefit the office market in the long run.

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“Accommodation assets will continue to benefit from an influx of talent and mainland Chinese students, while the outlook for the retail sector remains positive on the back of a steady tourism recovery, leading to capital value growth of 5% to 8%. ” said Chak.

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According to CBRE, a survey of 510 investors showed that the net purchase intention of Hong Kong-based professional real estate investors will decline from +9% in 2022 to -13% in 2023 after shrinking. , this year it was only minus 11%. According to CBRE, the survey found Hong Kong sentiment was at the bottom of the world’s 17 major real estate markets, with net purchase intent ranging from 7% to 15%.