EDITION MAIN PAGE | Commercial Real Estate
Is Hong Kong Real Estate Investment Activity Hot or Cold?
(HONG KONG) -- How active is Hong Kong's commercial real estate investment market? The answer depends on who you are reading at the moment.
For example, The Wall Street Journal reports Hong Kong is being flooded with money from mainland China and other parts of the world, making Hong Kong "attractive to investors during a period of currency instability."
The report says Hong Kong's real estate market "may be one of the more pronounced beneficiaries of a global effort by governments to print money and stimulate lending."
The real estate investment market is booming despite Hong Kong government officials predicting their economy will shrink up to 6.5 percent this year, the WSJ reports. Unemployment is at a three-year high.
Still, the newspaper reports, "home prices are up about 13 percent this year, while the benchmark Hang Seng Index has gained 18 percent in the same period."
Using data from Jones Lang LaSalle, the WSJ cites "Beijing's stimulus for bumping up sagging property prices in mainland China's four biggest cities by 15 percent between February and April of this year" as one reason for Hong Kong's strong real estate activity.
"Some analysts also argue the stimulus is likely benefiting Hong Kong, where local banking deposit rates sit at historic lows, encouraging excess capital to flow into real assets like property and stocks," the newspaper reports.
"Aggressive pricing by Hong Kong mortgage lenders and a limited supply of new apartments here also have helped property prices take off," the WSJ adds.
But Property Report Asia, an international online real estate research group, is apparently looking into a different crystal ball.
Using CB Richard Ellis Co. as its source, Property Report Asia reports "institutional investment activity (in Hong Kong) evaporated (in first quarter 2009) as investors continued to find it difficult to raise debt and equity."
Again, using CB Richard Ellis data, the online newsletter reports, "The Asian property investment market suffered an 83 percent quarter-on-quarter fall in sales in the first quarter of 2009, with Japan, Singapore and Hong Kong suffering the biggest falls in sales volume."
But smaller deals are still being done, the newsletter states.
"The number of investment deals under $69 million (U.S.) and demand for first-hand residential housing units picked up considerably towards the end of the first quarter 2009."
But new money into the market didn't primarily fuel these smaller deals, the newsletter states.
"Several rounds of (Hong Kong) government interventions resulted in commercial banks gradually relaxing their requirements on property lending and lowering their mortgage rates," Property Report Asia states.
Preliminary data shows that Asia's industrial real estate sector suffered the largest drop by market segment, slipping 95 percent from the same quarter a year earlier, the newsletter states.
Office and retail property transactions followed next, plummeting 89 percent for office and 40 percent for retail.
Singapore "experienced further declines in investment sales in the first three months of the year with only a few isolated transactions, as potential buyers and investors prefer to remain on the sidelines and adopt a wait-and-see attitude," Property Report Asia notes.
Total investment sales in Hong Kong, Japan and Singapore in the first quarter 2009 totaled $141 million (U.S.), a decline of 51.8 percent from the previous quarter and a fall of 98 percent from first quarter 2008, according to the online newsletter.
Copyright 2010 - 2012 WORLD PROPERTY CHANNEL NETWORKS, INC. All Rights Reserved.
Comment with