Hong Kong property investment dives in Q3 as Asia Pacific markets moderate

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The Hong Kong protests hit the financial hub’s commercial real estate investment during the third quarter of 2019, with transaction volumes falling 32% year-on-year to US$2.7bn, according to Real Capital Analytics.

Hong Kong deal volumes have also dropped 41% YOY to $13.9bn for the first nine months of the year, yet the city remained one of the Asia Pacific’s most active markets.

“Hong Kong transaction volumes dwindled significantly during Q3, largely due to reduced activity by domestic investors after the political protests erupted in June,” said David Green-Morgan, RCA’s Managing Director for Asia Pacific.

“The demonstrations only exacerbated a softening trend though following an exceptionally strong 2018.”

Asia Pacific CRE investment volumes Q3 2019 (source: RCA)

While Australia attracted the most CRE investment in Asia Pacific during Q3, Singapore emerged as a star performer.

Singapore CRE investment climbed 62% YOY to $2.6bn in Q3, and was up 69% to $7.5bn for the year to date.

Total Asia Pacific commercial real estate deals were down 9% YOY in the third quarter at $30.8bn, as the market faces ongoing trade tensions and slowing economic conditions globally.

Most of the region’s leading markets, including China, Japan and South Korea, recorded declines in transaction volumes over the first three quarters of 2019, while the Australian market was flat.

Australia CRE investment dropped 12% YOY to $6bn in Q3, however the market has held steady with a 1% increase to $18.5bn for the year to date.

“Australia performed relatively well in Q3,” noted Green-Morgan. “It saw large and smaller deals, and the flow of international capital remains strong.”

The Australian market has benefited from renewed confidence following the 2019 federal election and numerous recent interest rate cuts.