Foreign funds chase retail assets in housing estates as they offer better value compared to prime streets
- Annual investment yield seen rising to a 10-year high of 3 to 4 per cent from the previous 1 to 2 per cent, says Oscar Chan of JLL
- Local and institutional investors eye retail shops in major housing estates such as Tseung Kwan O, Yuen Long and Tin Shui Wai
Overseas institutional investors are focusing on acquiring retail properties in Hong Kong’s major housing estates, as they expect businesses catering to local communities to stay resilient compared to the uncertain outlook for retailers in the tourist belts, according to property consultants.
“Smart money from the US and Middle Eastern sovereign wealth funds are seriously looking for shops in major housing estates after seeing annual investment yield increase to a 10-year high of 3 to 4 per cent from the previous 1 to 2 per cent,” said Oscar Chan, head of capital markets at JLL in Hong Kong.
Shop prices and rents could rebound 5 to 10 per cent this year after dropping 70 per cent from a peak level in 2014, he added.
Many international brands, largely dependent on tourists, have closed or slowed their expansion in prime retail areas like Central, Causeway Bay and Tsim Sha Tsui. Visitor numbers to Hong Kong plunged 94 per cent to 3.57 million in 2020, with the outlook for tourism still hazy as the pandemic rages on.
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Chan said he has observed an increasing number of local and institutional investors eyeing shops in major housing estates such as Tseung Kwan O, Yuen Long and Tin Shui Wai.