CBRE, the world’s largest property services firm, today said the protests in Hong Kong’s Central business district are adversely impacting the city’s property market and investors are waiting to see how they develop before making investment decisions.
In its periodically-circulated MarketView research, the Los Angeles-headquartered firm said: “The incident will inevitably lead to an immediate slowdown in market activity in October as both investors and vendors hold a wait-and-see approach.”
Students and other activists have been demonstrating since last month ahead of the forthcoming election for the city’s chief executive officer, its most senior public office position. They are protesting against the Chinese government’s decision to approve the candidates.
With little progress towards a resolution so far, the movement known as Occupy Central has gathered momentum. There currently is little clarity at whether an accord can be reached between protestors and the Hong Kong authorities.
CBRE said that Hong Kong currently has low vacancy levels, limited future supply and gradually improving economic prospects, which meant that the city’s current market slowdown could be relatively short-lived “unless the event will extend for a prolonged period of time”.
“Broadly speaking, any real estate investments would rely on a stable political environment, sound economic and property market fundamentals, as well as rental growth opportunities,” CBRE said in its research.
In contrast to the uncertainty that CBRE said may come as a result of a prolonged protests, Hong Kong’s investment market in the third quarter of the year was in fact more active when compared to the same period last year. CBRE said HK$19 billion (€1.92 billion; $2.45 billion) of investments were recorded in the period, 95 percent higher than in Q3, 2014.
However, the firm said the investment total for the city year-to-date was HK$54 billion, down 12 percent compared to this point last year.
In respect to investment funds, the firm said that they had “stayed relatively quiet” in the past few quarters but had become more active in Q3. That, in turn, has prompted more landlords of investment grade assets, including REITS and family offices to make dispositions.
PERE examined the initial impact of the protests in Hong Kong this month the result of which can read in the forthcoming November issue of PERE magazine. To read perspectives from private equity real estate firms Phoenix Property Investors and Pamfleet Group as well as developer Nan Fung Development and broker Cushman & Wakefield, be sure to catch the issue.