Half-year commercial property investment activity hits $89b as office market remains heated

Massive en-bloc office sales of W Square, Octa Tower and Cityplaza Three & Four buoyed half-year figures.

Hong Kong commercial property investment activity for the first half of 2018 has exceeded the $56b recorded in 2017 after hitting $89b due to the completion of several massive en bloc office transactions, according to real estate consultant CBRE.

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This includes the sale of W Square, Octa Tower, 18 King Wah Road and Cityplaza Three & Four as Chinese investors continue to snap up office space. CBRE notes that sustained leasing demand has buoyed capital office values to new heights effectively translating to a drop of 15 basis points in yield levels.

In fact, Hong Kong's half year net absorption rate for Grade A office of 1.5m sqft already beat that of 2017’s full year record of 1.2m sqft, CBRE said in a report. 

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“Office remains the most popular asset class and the rising rents and low vacancy will continue to ensure its capital value growth. More strata-title sales are expected in H2. Industrial buildings are sought-after given their redevelopment potential and retail properties are beginning to regain attention from investors,”said Tony Ng, senior director, capital markets, CBRE Hong Kong.

A mere 15 deals closed by investors from the Mainland hit $31b YTD as they gradually diversify their portfolio beyond office assets and into street shops, retail podiums and factories.

The opening of cross-border infrastructure connecting Hong Kong to the rest of the Greater Bay Area in the second half of the year is also set to provide a slew of opportunities for the real estate industry, CBRE added.