Total investment deals down 16% YoY to $9.1b in Q1 23

Buyers were cautious as the interest hike impacts border reopening.

Despite China’s border reopening, investment deals in Hong Kong declined 16% year-on-year and 15% quarter-to-quarter to $9.1b in the first quarter of 2023, a Colliers study showed.

This is because buyers were still cautious due to interest hikes, which bested the effects of economic revival in China, as stated in the report.

Only 15 deals were made, with distressed sales and high-yield premises remaining the most sought-after. 

Mainland tourists returned and supported the retail sector, but most deals were below $200m, suggesting that most buyers are individual investors.

The in-demand industrial sector became subdued as the expectation gap grew between buyers and landlords.

“Investors were keen to look for assets with adjusted price levels to compensate for extra interest expenses. Only the retail sector witnessed a 2.9% QOQ capital value growth, suppressing the yield to 2.9% from 3.0%, while Grade A office and general industrial faced a mild decline in capital value,” said Colliers.

Colliers expects the investment market to grow next quarter whilst retail and private residential sites will continue to woo attention from investors when the interest rate hike ends and recent banking turmoil in the US and Europe stabilise.