Hong Kong real estate transaction volumes fell 43 percent in 2020, the second worst in the region after Australia. However, the city was already reeling from protests against the local government and Beijing, which began in the summer of 2019. Since then, the controversial National Security Law was introduced.
With some of the strictest border controls in the world, Hong Kong managed to keep out the worst effects of the covid-19 pandemic, but slow progress with vaccination threatens to derail the city’s recovery.
Hong Kong’s businesses have been doing their best to encourage vaccine take-up with a series of lotteries for vaccinated citizens. One lottery offered a $1.4 million apartment as the top prize.
A successful vaccination program is key to the city reopening again, most importantly reopening the border with Mainland China, whose business and leisure travelers have become crucial for Hong Kong’s economic success.
The protests of 2019 led to a 1.2 percent fall in GDP that year, while covid-19 led to a 7.5 percent fall in 2020. Growth bounced back sharply in the first quarter of 2021, but the city needs visitors to return for this to be maintained.
Investment volumes have recovered in 2021, with the industrial market leading the way and attracting interest from overseas private equity investors, who are often kept at bay by the multitude of strong local players. In March, Angelo Gordon bought an industrial property for $180 million, while Goodman Group, Blackstone Group and SilkRoad Property Partners have bought industrial and warehousing assets in recent months.
Behind with the rents
In the second quarter of 2020, office rents in the prime Central district fell 2.6 percent, according to Savills data, representing an eighth consecutive quarter of decline in office rents.
One-fifth of the APAC Fund Manager Guide firms are based in Hong Kong
Retail rents began to recover in the first half of 2021. However, the overall trend has been downward since 2013. Retail rents in the Causeway Bay shopping district have fallen more than 80 percent since the first quarter of 2013.
Hong Kong continues to be a prime location for Asia-Pacific real estate investment managers, with 10 of the PERE APAC Fund Manager Guide managers being headquartered in the city, including three of the top five: Gaw Capital Partners, PAG
The city’s private real estate managers were active fundraisers in the first half of 2021, PERE data shows. ESR, CITIC Capital, PAG and CDH Investments closed some of the largest funds in the region, totaling nearly $2.5 billion in committed equity.