Hong Kong dominates APAC commercial property investment market

It broke Tokyo’s ten-year streak after snapping $20.91m in sales volume.

As a growing number of investors moved away from Tokyo and redirected their capital to secondary cities like Yokohama and Osaka, Hong Kong was able to steal the crown away from Tokyo as the largest commercial real estate investment market in Asia Pacific after transaction volume grew 39% YoY to $20.91m, according to RCA capital analytics report. 

Similarly, sales of development sites soared 78% to an all-time high at $21.4b. This was led by Nan Fung Group’s purchase of a Kowloon site and Henderson Land’s Murray Road car park site purchase in Central. 

In the world’s least affordable city to own a home, land scarcity and strong capital infusion from the Mainland were the main reasons for the surge in Hong Kong’s stellar market activity that continues to defy cooling measures. 

“Chinese investors have always had the largest share amongst cross-border players, however, since Beijing introduced capital control rules, these investors have flooded Hong Kong with new capital. Whilst in 2016 Chinese investors targeted income-producing assets, in 2017 they moved into buying land,” the report noted.

Correspondingly, Hong Kong registered the lowest yields alongside close regional rival Singapore. Yields have compressed to below 3% since 2011 amidst skyrocketing property values as Hong Kong posts the fastest growing prices which increased by another 20% in Q4. 

Acquisition of income-producing properties also rose 39% YoY to $20.9b thanks to a series of shopping centre sales. 

Overall, Hong Kong was amongst the regional leaders after registering record-high acquisition of income-producing assets in 2017 along with Singapore and South Korea.

Photo from Diego Delso, CC BY-SA 3.0