Investors flock to local real estate amid global downturn
While global real estate markets struggle in the face of declining investment, Hong Kong’s family offices are helping the city resist the trend
Family offices are expanding their real estate holdings in Hong Kong as global economic shifts and market reforms enhance the city’s appeal as a leading investment destination.
Hong Kong remains a prominent wealth hub and has more than 2,700 single-family offices, according to a 2024 Deloitte study. In a 2025 report by Altrata, the city ranks third globally in terms of the number of ultra-high-net-worth (UHNW) individuals, defined as those with over US$30 million in assets.
“Hong Kong’s property values remain appealing for investors seeking value,” says Thomas Chak, head of capital markets and investment services at Colliers Hong Kong. He added that regional investors are redirecting capital to the city amid global supply chain reorganisation and evolving trade patterns.
Hong Kong’s commercial real estate market has outperformed global markets, with investment transactions declining only 1 per cent year-on-year compared to a 9 per cent global drop, says Chak. Recent policies incentivising the conversions of offices, hotels and residential buildings into student hostels have boosted potential returns for property owners.
Oversupply in the residential and commercial sectors has created new entry opportunities for investors. Luxury home prices fell by up to 50 per cent below pre-Covid-19 levels due to distressed sales, Savills reported last September.
Cash-rich investors looking for long-term capital appreciation can now enter the market at attractive prices, according to Martin Wong, senior director and head of research and consultancy in Greater China for Knight Frank. “If they are planning for long-term capital optimisation, they will invest as long as the price is much discounted and they find it a good deal,” he says.
International headwinds have reduced Hong Kong investors’ interest in overseas property, leading many to sell foreign holdings. Meanwhile, equity gains in the local stock market have strengthened domestic investment capacity.
“Investors are capitalising and putting the money they gain from the equity market back into property,”says Wong. “There’s low investment potential for high-net-worth individuals to invest in overseas property, but there’s still upside potential in Hong Kong.”
The shifting sands have prompted wealthy Hong Kong investors to focus on stable local real assets to preserve capital. “This reallocation is driven by the diminishing returns offered by overseas low-risk instruments as they are less attractive,” says Chak.
While family offices are diversifying into alternative investments such as fine art, jewellery and whisky, property still has its place as a core holding in uncertain times.
“They have the advantage of having a stable rental income and a solid demand,” says Wong. “If you invest in residential property in Hong Kong, though the price is not performing well, the rents [are] hitting historical highs. You’ve got rental income coming back and at a high level of demand.”
That said, family offices need to monitor interest rates and property cycles carefully, Chak advises. Market dynamics, local policy changes and foreign currency risks all affect property yields, asset values, refinancing and potential returns. “Careful market analysis and strategic allocation are essential to optimise risk-adjusted returns across the entire property portfolio,” he says.
To manage risks, family offices can use currency swaps and forward contracts to hedge against interest rate fluctuations and lock in borrowing costs, says Chak. “This results in greater predictability of cash flows for floating-rate liabilities and assets sensitive to interest rates,” he explains.
Meanwhile, emerging property sectors are creating fresh investment opportunities. For example, rising demand for student housing, senior living facilities and school campuses all offer potential for higher returns. This may be further enhanced by the government’s recently launched pilot scheme to relax rules for converting hotels or commercial property into student accommodation.
Demand for data centre space is particularly robust from mainland Chinese and Hong Kong-based IT service providers, e-commerce platforms and banking institutions. Property consultancy CBRE expects tightening vacancy rates and potential rental growth over the next 12 to 18 months.
“By investing in alternative sectors alongside traditional holdings, family offices can tap into new sources of value,” says Chak. “Spreading exposure beyond a single market or sector can better balance risk and reduce vulnerability to geopolitical disruption.”