Hong Kong drops to the third spot as the largest commercial property market in 2019

Concerns over the US-China trade war, the months-long protests, and the Wuhan pandemic to blame for the decline

Modern office buildings in Hong Kong. estherpoon/Shutterstock

Data and analytics firm Real Capital Analytics revealed that Tokyo and Seoul have surpassed Hong Kong as the biggest commercial real estate market in 2019, reported South China Morning Post.

Back in 2018, Hong Kong took the lead, while Tokyo and Seoul came in the second and third spots.

Managing director of capital market in Asia at Colliers International Terence Tang said: “After experiencing years of strong rental and capital value growth, Hong Kong’s property market is entering a downward phase, while the local economy faces pressure from both external and internal volatility and tensions.”

Since June, Hong Kong has been facing the most catastrophic political impasse in decades, which have distressed the retail and tourism industries. The US-China trade war has also affected the trade and investment activity, as concerns grew over its long-term effect.

More: Escalation of Wuhan virus threatens more retail sales loss in Hong Kong amid protests

However, analysts believe that Hong Kong will recover in the next 12 months as reasonable prices return, encouraging a buyers’ market and prompting investors to scour for massive discounts and take advantage of opportunities.

“Affluent investors and institutional funds are also eyeing opportunities presented by distressed sales of assets,” added Tang.

Property consultancy CBRE said that the recent Wuhan pandemic has also disrupted the business activity in Hong Kong, leading to “short-term implications on investment volume.”

They also revealed that Tokyo has always been the biggest commercial property market in the Asia Pacific region, excluding the one-off large commercial property deal in Hong Kong in 2018.

Head of occupier research in Asia-Pacific at CBRE Ada Choi said: “Funds across the region have raised capital in the past two years, which they are looking for somewhere to deploy. Japan is an attractive destination because of the depth and the breadth of its market, as well as low-interest costs.”

On the other hand, “investment momentum in Seoul has been building for some time,” said Real Capital. The property market in Seoul has “more than tripled in the period.”