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Real estate undergoes multi-sector price corrections

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.

Industrial

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.


相關專家

鄧 淑賢

香港及南中國研究部主管

Research

香港

鄧淑賢擁有超過14年房地產研究經驗,對各類型房地產、研究產品和客戶需求有深入了解。作為高力國際香港及華南地區的研究主管,她致力研究香港及南中國的房地產市場發展形勢,發表相關研究報告及刊物。自加入高力國際以來,鄧淑賢帶領團隊進行具前瞻性、思想領導型的市場研究,為投資者、業主和租戶提供獨特的市場見解和尋找新商機。

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Fiona Ngan

Head of Office Services

Office Services

香港

簡介

高力國際總經理 - 顏慧萍小姐是香港及九龍商業物業服務主管。她在此領域已經超過 26 年經驗,她憑藉深厚的專業知識和市場經驗,多年來為各行各業的租戶和大業主提供全面的物業方案,成績有目共睹。不論是在歷史悠久的香港商業區,抑或是在新冒起的九龍區,她也能因應客戶需要物色理想據點,實現業務上的鴻圖大計。

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鄭 亥延

估價及諮詢服務主管

Valuation & Advisory Services

香港

鄭亥延小姐擁有十五年廣泛的估值和諮詢服務經驗,運用專業知識,提供的服務範疇如最優化使用分析,可行性研究,市場分析,成本效益分析和項目評估研究等。她曾參與眾多亞洲項目,項目地域包括在韓國、香港、中國、中東等國家。項目涵蓋從簡單物業開發到辦公、零售、住宅、酒店、工業和機構的城市綜合體。

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