19 July 2012, Hong Kong – According to CBRE’s Q2 research report, Hong Kong investment volumes maintained strong momentum in Q2 2012 as transaction volumes totaled HKD26.5 billion (excluding residential investments and land sales), representing a surge of 114% y-o-y, therefore maintaining the strong performance registered in Q1 2012. The research report showed that office and retail contributed 40% and 46% respectively of the total turnover in Q2 2012.
Commenting on the latest local market environment, Dominic Chung, Executive Director, CBRE Investment Properties, Hong Kong said, “Considering the low interest rate environment and weaker stock market performance, investors are attracted to real estate as an alternative investment. Local funds and private investors are most active while foreign funds are largely inactive or concentrating on divestment plans. End-users demand was strong in recent months, particularly from those with large space requirements.”
According to the report, developers and investors have become more active in offloading non-core assets in order to generate liquidity to support other investment opportunities. Some of the largest developers have reportedly been active in disposing of non-core offices, car parks and retail properties, particularly those in decentralized areas such as Kwai Chung, Kwung Tong, Kowloon Bay and Tsuen Wan.
“However, activity may ease through the second half of the year as some investors may have brought forward their requirements in anticipation of tighter availability of credit and tougher lending conditions. Given global economic uncertainties and recent or upcoming elections in the US, China and Hong Kong, investors may also adopt a more cautious approach in the coming months,” Chung added.
In Hong Kong, capital values generally continued to rise on the back of solid investor demand. Yields have remained largely stable although some compression has been evident in the office and retail sectors. Office capital values rose 3.6 % q-o-q to reach HKD23,700 psf by the end of Q2 while prime high street capital values rose 10.3% qo-q to HKD217,821 psf by quarter. In the industrial sector, capital values for warehouse, flatted factories and industrial/office buildings were up 3.1 % q-o-q, 5.4% qo-q and 5.1% q-o-q respectively.
Neither CBRE nor its affiliated companies make any warranties or claims on the implied accuracy of the information contained herein.
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