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Yields hit by fast rises in capital values

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THE sharp appreciation of office capital values has pushed the investment yield to an unreasonably low level, says Lee Hon-chiu, chairman of Hysan Development.

''There is a very large gap between office capital values and office rents. It is not reasonable,'' he said after the company's annual general meeting yesterday.

He said a reasonable yield for office property should be around six per cent, but some properties now commanded a yield as low as three per cent.

He said the gap between office prices and rents should be narrowed, because rents were bound to rise further.

The office market would continue to be in limited supply during the next two years.

Mr Lee said the average rental value of Hysan's investments properties was lower than market value.

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