Hong Kong dominates APAC commercial property market as transaction volumes hit $191.5b in Q1

The city was the only market that ranked in the top five across all five property sectors - office, industrial, retail, apartment and hotel.

Hong Kong easily blew APAC real estate markets like Singapore and South Korea out of the running as a series of blockbuster deals across all five property sectors buoyed commercial investment volumes to balloon 83% YoY to $191.5b (US$24.5b) in Q1, according to a report from Real Capital Analytics (RCA).

The number of deals closed in Hong Kong in the past twelve months also surged 40% to 402 with notable transactions including Link REIT’s sale of 17 shopping malls to Gaw Capital for US$2.9b which buoyed activity in the recovering retail sector. China Create Capital also teamed up with China Taiping Insurance to snap 18 King Wah Road office tower for approximately US$1.3b.

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“Hong Kong is the most dominant market in Asia Pacific. It was the only city in the region that ranked in the top five metros across all property sectors,” said RCA.

Property boom
Retail sales volume exploded 192% to US$9,848m in the past twelve months, propelling Hong Kong to the top spot with ease. Industrial sales volume also ballooned 93% to US$3,544m, enabling the city to put Australian cities like Sydney, Melbourne and Brisbane out of the running for the top spot.

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Sales volume for the office and apartment sector followed same steep trajectory after hitting US$8,965m and US$1,299m in sales volume respectively. Although hotel sales volumes dipped 15% to US$869m as investors held back purchases, the city was able to score third place in APAC.

Along with Singapore and China, Hong Kong also took charge of cross-border capital activity with trade activity to China hitting US$4.1b and US$1.7b in Japan.

Capital flows to Singapore and Australia also surged with sales volume hitting US$1.3b and US$1b respectively.

Amidst a chronic land shortage and aggressive market takeup, it comes as no surprise that the city also led its global peers in the growth of commercial property prices, easily beating urban capitals like San Francsico, Los Angeles, London, Paris and New York and falling only to the might of Sydney which scored top spot.

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“The first quarter of 2018 recorded the highest count of large deals in history. Investors looked to deploy large amounts of capital to gain immediate scale and exposure to sectors like logistics or retail. This isn’t a phenomenon restricted to Hong Kong, as we have seen large portfolio or corporate purchases across the region,” said RCA senior director of analytics for Asia Pacific Petra Blazkova.

Photo from Haydn Hsin - Own work, CC BY-SA 3.0