Commercial property investment in Asia-Pacific fell to lowest level in 13 years in third quarter as high interest rates hit demand, says JLL report

Name: A glimpse inside Hong Kong’s notorious subdivided homes
Uploaded: 2023-11-14T08:59:34.000Z
Duration: 8 min 1 s
Description: A glimpse inside Hong Kong’s notorious subdivided homes

The amount fell by more than a fifth from the same period a year ago to US$21.3 billion, the lowest figure since the second quarter of 2010

Investors believe interest rates will remain elevated until the middle of 2024, hampering investment volumes, JLL said

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In the July to September period, investment in Hong Kong’s commercial property, including offices, logistics, retail and hotels, amounted to US$800 million. Photo: SCMP Pictures

Cheryl Arcibal

Published: 4:59pm, 14 Nov 2023Updated: 5:03pm, 14 Nov 2023

Investment in commercial property in the Asia-Pacific region plunged to the lowest level in 13 years in the third quarter of 2023 as elevated interest rates dampened demand, according to the latest report by JLL.

The amount fell by more than a fifth from the same period a year ago to US$21.3 billion, the lowest figure since the second quarter of 2010. Hong Kong’s commercial real estate received the smallest amount of capital in the region even as it enjoyed 15 per cent annual growth, the report showed.

Mainland China was the most active market, with US$4.7 billion of commercial property investment, up by 47 per cent from a low base in the third quarter of 2022.

Many central banks have tightened their key interest rates with “unprecedented” speed and scale to tame runaway inflation, JLL said.

For example, it took just 15 months for the US Federal Reserve to raise borrowing costs by 525 basis points, a dizzying pace compared to the prior four cycles when it increased rates by 280 basis points over a 23-month period.

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A glimpse inside Hong Kong’s notorious subdivided homes

“Due to the rise in rates, fixed-income instruments have once again become yield-attractive assets to institutional investors, causing them to reconsider allocations to fixed-income versus other asset classes,” the property consultancy said in its report.