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Real estate undergoes multi-sector price corrections

Hong Kong Blog RICS Rosanna 1536X1040

Hong Kong’s property market is witnessing volatility with a multi-sector price correction leaving investors, occupiers and owners in extended negotiations to find a price that best supports their flexed short and long-term strategies.

Globally, all cities must overcome the unprecedented impact of COVID-19. In Hong Kong, it’s also contending with an economic downcycle and a price adjustment that is impacting the Office, Investment, Retail and Industrial sectors. However, the adjustment is creating opportunities for property stakeholders, as investors explore properties with more attractive pricing, tenants look for cost-savings and owners of aging stocks consider renovation, or repositioning strategies, to support longer-term yields. Covering the core sectors mentioned, we share the insights from the Colliers Quarterly Update Q2 2020.

Investment Sector

Real estate investment transaction volumes in Q2 witnessed a drop of -68% YoY, as most investors hold back the deployment of capital and remain on the sideline in terms of activity. Meanwhile, pricing dislocation continued to be a hurdle in Q2 for transactions, with sellers currently having strong holding power as buyers look for assets with discounts, creating a wide gap between the bid-ask price - straining the transaction volume.

In addition, the activity that was carried out in the first half of 2020 was dominated by local investors as some developers disposed of their assets to increase their liquidity, boosting buying power in support of upcoming development strategies.

Office Sector

The economic impact of the pandemic is disrupting occupiers’ real estate strategies, forcing them to review their current situation to relieve financial pressure. The number of enquiries from occupiers around potential relocations with more cost-effective space has increased, which is aligned with a key submarket trend that has seen a quarterly decline in rents; Admiralty (-7.6%), Wan Chai (-7.5%) and Tsim Sha Tsui (-7.2%). The city-wide work from home experiment has also shown occupiers that it is possible to integrate this strategy into their real estate. In the short-term it may lead to businesses revisiting flexible workspace solutions in the same or alternative locations to allow employee flexibility, but in the long-term we believe it is not going to replace the traditional office leasing, especially in a densely populated city like Hong Kong where residential living areas tend to be small.


Hong Kong’s limited land supply is driving record highs in land sales with China Mobile securing a recently tendered parcel of industrial land in July, after missing out on a data centre bid at Tseung Kwan O in December 2018. The HKD5.6 billion (USD722.6 million) site in Sha Tin is the biggest industrial plot of land to come to the market since 1998.

The demand for data centre space in Hong Kong is high with interest from investors, owners and operators due to its strong potential yield and a rental circa HKD30-35 sq. ft. In the next three years the market will see about 1.8 million sq. ft. of data centre supply brought to market, however the challenge is that this supply has already been pre-leased or owner-occupied, meaning supply is still restricted.

Retail Sector

Overall, retail sales remained under pressure, dropping 34.5% YoY in the first five months of 2020 amidst the continued suspension of inbound tourism. Retail sales in supermarkets demonstrated some resilience and increased 12% YOY during the same period. The sector did witness some key leasing demand in Q2 with Don Don Donki expanding with two new retail premises under the flagship address of 100 Queen’s Road Central and the entire first floor of Monterey in O’South.

Related Experts

Rosanna Tang

Head of Research, Hong Kong & Greater Bay Area


Hong Kong

Rosanna Tang leads the research team in Hong Kong and South China in Colliers. Driving different research papers and client-orientated initiatives, Rosanna has a deep understanding of all property sectors, research products, and client requirements. Rosanna is also one of the spokespersons in the company, and she frequently speaks in different industry events and media interviews. 

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Fiona Ngan

Head of Office Services

Office Services

Hong Kong

Fiona Ngan is the Head of Office Services and she has 26 years in this field and presently focuses on leading the Hong Kong and Kowloon Office team. Her strengths include project leasing and the provision of a board range of client services, particularly in Tenant Representations. She has extensive experience in business development, real estate strategic solutions and a range of consultancy services.

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Cynthia Ng

Executive Director | Head of Retail Services

Retail Services

Hong Kong

Cynthia Ng is an award-winning retail services veteran with more than 14 years’ experience.  Cynthia was educated in Sydney and holds a bachelor degree in Construction Economics (Quantity Surveying) from University of Technology, Sydney.  She started her career with major developers in Sydney and has spent the last 11 years in Hong Kong with global property agencies working across all key retail sectors and high-profile fashion, F&B and international FMCG brands.

As Executive Director of Retail Services, Cynthia leads the successful operation of the retail brokerage business, meeting the needs of the company and her clients, while cultivating a team with the best leasing advisory and negotiating skills.

Prior to joining Colliers, she worked in CBRE as Director of Hong Kong Retail, with a key focus on international brands entering and expanding in Hong Kong. In 2015 she won the ‘Excellence in retail services’ award from CBRE, recognising her achievements in business.


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Hannah Jeong

Head of Valuation & Advisory Services

Valuation & Advisory Services

Hong Kong

Hannah Jeong has extensive valuation & advisory services experience over 15 years including property investment and development projects specialising in valuation, development consultancy, financial analysis and feasibility studies. Project’s geographic coverage span across Asia Pacific and Middle East, in particular Hong Kong, China and Korea. She has started her career with Colliers since 2006 and is now heading our Valuation and Advisory Services - Hong Kong Office with over 40 professionals.

Hannah has strong client coverage on major financial institutions including global real estate funds and private equity firms.

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