Hong Kong’s property deals rise to two-year high as Chinese buyers, foreign investors snap up shops, offices and parking bays
- Purchases soared to a two-year high of HK$17.3 billion (US$2.2 billion) in the eight months through mid-August, according to Midland IC&I’s data
- Investors domiciled in mainland China made up HK$8.53 billion, or 49 per cent of the deals, the highest since the street protests of 2019
Purchases by foreigners and Chinese investors soared to a two-year high of HK$17.3 billion (US$2.2 billion) in the eight months through mid-August, according to data compiled by Midland IC&I, which tracks non-residential property deals larger than HK$100 million. Investors domiciled in mainland China made up HK$8.53 billion, or 49 per cent of the deals, the highest since the city’s anti-government protests of 2019, the data showed.
“The overall investment market has gradually recovered in Hong Kong, with the pandemic under control,” said Tony Lo Chin-ho, chief executive of Midland’s ICI Property unit. “The number of big-ticket transactions is showing an upward trend.”
“Although the anti-sanctions law was postponed in Hong Kong, it still caused worries [among] foreign investors,” said Lo, adding that the pace of foreign investments will slow down in the second half of 2021 in Hong Kong. “Most foreign funds entered the market in the first half of the year.”
Still, the city is in the throes of a real estate bull run, as investments poured into residential property, offices, retail shops and even parking spaces, taking advantage of record low interest rates and easy financing.
The overall volume of property transactions - inclusive of residential and commercial real estate - is expected to top HK$628.4 billion in the first eight months, surpassing last year’s 12-month total, according to data provided by Centaline.
Notably, market demand for data centers, warehouses and logistics centers increased. Many Chinese companies including the electric carmaker Xpeng, and the short-video platform Kuaishou Technology have also rented offices in Hong Kong, following their initial public offerings on the city’s exchange.
“As foreign capital has already entered the market in the first half, and the number of suitable listings has decreased, the proportion of foreign capital’s investment will gradually decline in the second half,” said Alvan Chan, director of Midland Industrial, a department of Midland IC&I.
The property bull run helped Midland to swing back into the black, with an interim net profit of HK$33.26 million, compared with a loss of HK$7.78 million in the first six months of 2020. The turnaround was mainly attributable to the rebound of the non-residential property market in Hong Kong in the first half, Midland said in its stock exchange filing, without declaring an interim dividend.