East Rail Line Extension to Drive Future Capital Appreciation in Adjacent Districts
HONG KONG SAR – Media OutReach – 24 May 2022 – Global real estate services firm Cushman & Wakefield today presented its 1H 2022 Hong Kong investment market overview and forecast. Impacted by the fifth wave of the pandemic, investment activities in Q1 2022 were slowed down, dampening the large deal transaction (deal size of over HK$100 million) count in the quarter. However, although this period has delayed investors’ decision making, it has not diminished investment confidence in the city. Investment activities in Q2 picked up demonstrably, showing promising signs for a further recovery in the second half of the year. The full year’s transaction volume is expected to reach HK$70 billion, with industrial assets and development sites continuing to be sought-after. Meanwhile, the opening of the East Rail Line cross-harbour line will also benefit and spur capital appreciation for adjoining properties.
Figure 1: Annual CRE investment deals and consideration in the last decade (as of 15 May)
Figure 2: Transactions by sector in 1H 2022 vs. 10-year historical average (as of 15 May)
Figure 3: Investment transactions by investor type
Overview of 1H 2022 Investment Transactions
The fifth wave of the pandemic put investment decisions largely on hold, subsequently delaying investment activities. For the year-to-date period as at mid-May 2022, the investment market recorded a total of 43 transactions, at an average deal size of HK$498 million, recording a total consideration of HK$21.4 billion (Figure 1).
Keith Chan, Director and Head of Research, Hong Kong, Cushman & Wakefield said, “The average deal size has trended downwards due to the continuation of the pandemic, as investors buckled up and focused on investments with smaller capital lump sums. We expect that the large transaction deal count will reach 50 deals in the first half of 2022, with total consideration forecast to hit HK$28 billion. With the pandemic being gradually contained, it is expected that the investment sentiment will improve in the second half of the year.”
Investment Transactions by Sector
Among all property sectors, industrial assets, hotels, and development sites were the most active in 1H 2022. Industrial buildings accounted for a 32% share of the total consideration, surpassing the historical 10-year average of 15%. (Figure 2). Hotel assets also saw traction, with a significant increase in deals driving a 20% share of the total consideration, up fivefold on last year on a like-for-like basis. Development sites’ transaction volume also recorded a similar expansion to hotel assets, taking a 20% share of the total volume, far exceeding the average of 9% in the last decade. The key factor here has been the continuing strong self-use demand for residential properties, with developers actively acquiring suitable residential sites to meet future housing demand.
A boom in hotel transactions in the first half of the year is noteworthy, with several headline acquisitions recorded. Keith Chan commented, “The significant reduction in tourism activities has adversely affected the hotel business in the city, and many hotel owners have been willing to sell assets at a discounted price. At the same time, in light of the persistently strong housing demand, foreign real estate funds have been encouraged to collaborate and form joint-ventures (JVs) with local operators, seeking to further purchase distressed hotel properties for value-add conversions such as co-living and multi-family uses.”
Investor Breakdown
Tom Ko, Executive Director and Head of Capital Markets, Hong Kong, Cushman & Wakefield, said, “In terms of the funding sources, local investors continued to dominate the market as border restrictions remain in place, accounting for over 56% of total transactions. Nevertheless, several prominent investment funds took advantage of the quiet market and looked to bargain-hunt. During this period, funds accounted for 42% of total transactions, a significant increment of 14% compared with 1H 2021. Amongst them, most industrial and hotel deals were purchased by foreign funds forming JVs with local operators, providing financial support for business expansion. Relatively speaking, mainland China investors were quieter than last year, accounting for just 2% of the total transaction volume (Figure 3).”
New Market Spotlights
The East Rail Line cross-harbour extension, together with properties within the Northern Metropolis area, will be the future market spotlight. With the official opening of the East Rail Line cross-harbour section, the mass transportation extension to Hong Kong Island is now robust. It is expected to benefit and drive capital appreciation in properties located along the rail line, especially in the Wan Chai North district and around the Hong Kong Convention and Exhibition Centre, with the buyers’ market as the focus. In addition, the future development of the Northern Metropolis area and infrastructure provisions will further support the New Territories North area. The expected completion of the Kwu Tung station in 2027, connecting with Lok Ma Chau station, will further provide transport support to residents in the New Territories North. The Kwu Tung, San Tin, and Hung Shui Kiu areas are all expected to benefit and to attract major developers for investment.
Market Outlook
As the fifth wave of the pandemic comes under control, the investment market will gradually recover into the second half of the year. Tom Ko concluded, “Industrial properties, hotels, and development sites are expected to remain attractive for investors. Particularly, industrial assets will be a priority for investors, as their flexibility for conversion to warehouses and data centers remains popular to meet new economy demands. Development sites will be further accelerated due to future infrastructure provisions such as rail extensions, which will subsequently drive capital appreciation and population growth. Foreign funds will likely remain active, strengthening local operators for further JVs and expediting greater funds to allocate and invest in the city’s real estate market. We expect the 2022 full-year investment total transaction volume to reach HK$70 billion, outperforming 2020 and 2019 levels.
Please click here to download the photo and presentation deck.
Photo caption:
Photo: (Right to left) Tom Ko, Executive Director and Head of Capital Markets, Hong Kong, Cushman & Wakefield and Keith Chan, Director and Head of Research, Hong Kong, Cushman & Wakefield
About Cushman & Wakefield
Cushman & Wakefield (NYSE: CWK) is a leading global real estate services firm that delivers exceptional value for real estate occupiers and owners. Cushman & Wakefield is among the largest real estate services firms with approximately 50,000 employees in over 400 offices and 60 countries. Across Greater China, 22 offices are servicing the local market. The company won four of the top awards in the Euromoney Survey 2017, 2018 and 2020 in the categories of Overall, Agency Letting/Sales, Valuation and Research in China. In 2021, the firm had revenue of $9.4 billion across core services of property, facilities and project management, leasing, capital markets, valuation and other services. To learn more, visit 
www.cushmanwakefield.com .hk or follow us on LinkedIn (
https://www.linkedin.com/company/cushman-&-wakefield-greater-china).
#Cushman&Wakefield
Services
STAKEHOLDER ENGAGEMENT
Stakeholder mapping, analysis, engagement and communication needs to be detailed to avoid business losses or even worse, a crisis. How can you do this effectively to prevent failure? ...
BUSINESS INTELLIGENCE
Data-driven business decisions have never been as crucial, especially in this era. MGBF leverages off, technology, experience and market presence to aid businesses in making accurate decisions. ...
GOVERNMENT RELATIONS
MGBF provides comprehensive strategic advice and results-focused solutions to solve clients' problems in business-government relations so they can focus on their core business. ...
BUSINESS & BROADER MARKET ACCESS
A critical business challenge is meeting the right decision-makers and potential buyers through the best channel and platform. How will you improve your business competency? ...
Upcoming Events
SECURITY CONCERNS IN CRITICAL VALUE CHAINS
The threat matrix has evolved to include information warfare, cyberspace incursions, big data and behavioural communications. Business leaders need to be aware of these threats to survive. What are you doing as a key stakeholder?
CHARTING THE FUTURE OF DATA RESILIENCE
Companies can now live or die based on their ability to generate and manage data. Effectively managing existential challenges is the opportunity that business leaders need to grasp for a sustainable future. Calling for speakers!
ADDRESSING WEAPONISED INFORMATION IN THE MEDIA
Corporations and their leadership often face weaponised information attacks in the media. Understanding these advanced business threats is crucial. Recently completed. View proceedings online.
DIGITAL RESILIENCE IN THE CORPORATE SECTOR
Special session: Cyberwarfare Waged on the Corporate Sector - Lessons from the Russia-Ukraine Crisis. Corporations are in a digital arms race that many don't realise. How does this relate to your organisation?
MGBF In The News
KUALA LUMPUR, 23 June 2022 — Malaysia Global Business Forum (MGBF) ties up with scoutAsia to ensure that businesses are equipped with deeper regional insights. The past two years has seen a massive shift in the way businesses are conducted with digitisation, digitalisation and automation continuously being adopted to improve […]
KUALA LUMPUR, 25 May 2022 – The Malaysia Global Business Forum (MGBF)’s exclusive roundtable on ‘Security Concerns in Critical Value Chains’ was held in a hybrid setting yesterday at the Eastin Hotel Kuala Lumpur. The guest of honour was Yang Berbahagia Tan Sri Dato’ Seri Rafidah Aziz, former minister of […]
The Malaysia Global Business Forum (MGBF) has released a report following the roundtable on ‘Digital Resilience in the Corporate Sector’, which was recently held in Kuala Lumpur. In attendance as guest of honour was Deputy Minister of Communications and Multimedia, Datuk Zahidi Zainul Abidin. The report recommended several critical development […]
Trade and investment delegations will trickle back over the next few months, but the second half of the year should see considerable return of business travellers. It was learnt that over 50 per cent of international business chambers and industry associations surveyed will consider sending exploratory teams to Malaysia during […]
KUALA LUMPUR, 30 March 2022 – The Malaysia Global Business Forum (MGBF)’s exclusive roundtable on ‘Digital Resilience in the Corporate Sector’ was held in a hybrid setting yesterday at the Element by Westin Kuala Lumpur. The discussion focused on what business leaders need to understand, to ensure business resilience and […]
The Malaysia Global Business Forum (MGBF)’s exclusive roundtable on ‘Addressing Weaponised Information in the Media’ was held in a hybrid setting today at the Hilton Kuala Lumpur. The discussion focused on addressing one of the most relevant threats to businesses in the digital economy – cyber threats causing physical and […]
The current floods that have impacted various parts of the country have given rise to an extensive commentary on the response cycles of various stakeholders. It has in turn led to continued crisis communications and statements in the media by agencies and ministries alike. This binary approach to the discussion […]
The formation of a special Cabinet committee to develop strategic measures to safeguard the economy amid the Covid-19 outbreak shows the Malaysian government is serious about creating a balance between the continued safety of the general population and the survival of the economy. In the global context, as many countries […]
Innovation, coupled with a radical departure from contemporary thinking, is required with a possible reality of a prolonged crisis becoming the new reality that people and companies must function through. Malaysia Global Business Forum founding chairman Nordin Abdullah said innovation and resilience from all stakeholders will be required to shape […]
The recent announcement that a committee jointly chaired by senior ministers in charge of security and economy clusters respectively demonstrates that the Malaysian government is serious about creating a balance between continued safety of the general population and the survival of the economy. In the global context, as many countries […]
Innovation, coupled with a radical departure from contemporary thinking, is required with a possible reality of a prolonged crisis becoming the new reality that people and companies must function through. Malaysia Global Business Forum founding chairman Nordin Abdullah said innovation and resilience from all stakeholders will be required to […]
Innovation, coupled with a radical departure from contemporary thinking, is required with a possible reality of a prolonged crisis becoming the new reality that people and companies must function through. Malaysia Global Business Forum founding chairman Nordin Abdullah said innovation and resilience from all stakeholders will be required to […]
The announcement that a committee jointly chaired by senior ministers in charge of security and economy clusters demonstrates that the government is serious about creating a balance between the safety of the population and the survival of the economy. In the global context, as many countries struggle to deal […]
THE Covid-19 outbreak has exposed the citizens of most countries to a dangerous virus. But perhaps more importantly, it has exposed the weaknesses in supply chains of nations.The government should be commended for setting up a task force to maintain critical supply chains as it’s an excellent step to ensure […]
In the last few days, the Movement Control Order (MCO) has awoken many to the fact that supply chains that we assume work without question have now become highly critical.The establishment of a special task force to maintain critical supply chains by the current government is an excellent step to […]
by Gunaprasath Bupalan (YouTube – Emjay Communications, The Malaysia Global Business Forum, News Hub Asia, Property360Digest) The CEO Series 2019 by REHDA Institute is more than a developer’s driven event; it is about the strategy made real, where property and its ancillary businesses will provide balance in social, economic and […]
I am the Managing Director of Lynas Malaysia and I’m writing to you on behalf of our employees and contractors and their families. In recent weeks you may have seen a campaign of false information by anti-Lynas activists. We have always welcomed informed debate, however, the spreading of false allegations […]
I am the Managing Director of Lynas Malaysia and I’m writing to you on behalf of our employees and contractors and their families. In recent weeks you may have seen a campaign of false information by anti-Lynas activists. We have always welcomed informed debate, however, the spreading of false allegations […]
I am the Managing Director of Lynas Malaysia and I’m writing to you on behalf of our employees and contractors and their families. In recent weeks you may have seen a campaign of false information by anti-Lynas activists. We have always welcomed informed debate, however, the spreading of false allegations […]
