Investors turn to prime property as trade war threat dims outlook for other assets

The economic uncertainty has actually resulted in a positive development for Hong Kong’s real estate sector.

Hong Kong’s prime property market may stand to benefit from growing trade tensions and rising political uncertainty between the US and China as investors are increasingly betting on luxury real estate as the outlook for other assets dim, according to Colliers Asian Market Snapshot.

“[M]ajor markets such as Hong Kong and Singapore are likely to benefit from the perception of property as a safe haven during uncertain times,” said Colliers Capital Markets & Investment Services managing director Terence Tang.

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Concerns of a trade war between the world’s economic superpowers US and China has actually resulted in a surprising development, prompting some level of capital inflow into the property market, observed Antonio Wu, Colliers Asia deputy managing director. “And if the stock market remains volatile in coming months, we anticipate that capital will continue to flow into the property sector, particularly towards large-size transactions.”

Both mass and luxury home segment registered thriving levels of activity in Q1 with home prices rising for the 23rd consecutive month in March.

The recent sale of House 2 at Mount Nicholson for a whopping $1.4b (US$179m) represented a unit rate of more than $150,000 per square foot on a saleable area. HNA also sold three residential sites in Kai Tak, turning a profit of 15% in less than 18 months from selling to Henderson Land and Wheelock for $16b and $6.36b respectively.

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“The residential sector remains strong and end-user demand continues to grow. That being said, collective sale activity has grown and we see a number of opportunities in the market,” said Antonio Wu, adding that medium-size developers as well as those from the Mainland are actively pursuing these types of sales opportunities as government land sales may be too large for some developers to take on individually.

The office sector also remained attractive for investors in Q1 with notable transactions taking place in the form of the sale of No. 18 King Wah Road in North Point, W Square in Wanchai, Bonham Circus in Sheung Wan and nine floors in C-Bons International Centre in Kwun Tong, adding up to approximately $16.6b.

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