Why private equity firms have been snapping up Hong Kong’s local malls
- Hong Kong neighbourhood malls are seen as a stable, long term investments, insulated from the vagaries of tourist spending, analyst says
Hong Kong’s neighbourhood shopping centres have come into focus recently for their solid rental yields and reliance on local consumers, in contrast to glitzier malls that cater to the more fickle tourist spending.
Property broker JLL estimated that market yields for neighbourhood malls ranged between 3 and 4.5 per cent, well above the city’s high street shops at 2.5 per cent and grade A offices at 2.7 per cent.
“Neighbourhood malls in Hong Kong are an attractive retail asset worth considering for long-term investment due to stability, increased reliance on domestic consumers and relatively higher yields compared to other real estate classes.” said Denis Ma, head of research at JLL.
He said the trend would continue as neighbourhood shopping centres typically provided a yield higher than other real estate asset classes.
Investors and funds have channelled HK$63 billion (US$8.07 billion) into acquiring neighbourhood malls since 2009, accounting for 63 per cent of total investment, according to JLL.
