Hong Kong falls off global real estate investors' radars even as they eye more assets in Asia-Pacific

By Cheryl Arcibal / SCMP | January 21, 2021 5:00 PM SGT
Hong Kong’s office assets, however, remain attractive, according to a survey by Colliers. Photo: Getty Images
SINGAPORE (EDGEPROP) - Hong Kong seems to have fallen out of favour with global real estate investors, even as a greater number are either keeping or increasing their allocations for the Asia-Pacific region this year, various surveys have found.
The special administrative region (SAR) was not among the top 10 destinations in a survey jointly conducted by the Asian Association for Investors in Non-Listed Real Estate Vehicles (Anrev), the European Association for Investors in Non-Listed Real Estate Vehicles and the Pension Real Estate Association. It came in at No. 11, same as last year, having fallen from the ninth spot that it occupied along with Macau in 2019.
Published annually in January, the survey polled 84 institutional investors and 15 funds of funds managers that collectively represented a minimum of US$846 billion in real-estate assets under management. About 77 per cent said the coronavirus pandemic had not changed their investment plans for Asia-Pacific, while 22 per cent said they would increase investment in the region.
"We have very reassuring results that basically investors said the pandemic has not impacted their investment plan, and 22 per cent even said it has pushed them to increase their investments in the Asia-Pacific region," said Amelie Delaunay, director of research and professional standards at Hong Kong-based Anrev.
Investors still have a lot of capital to invest and the real-estate market is much less volatile. The Asia-Pacific region is attracting investors looking to diversify, as well as institutional investors looking to rebalance their portfolio, Delaunay said.
In the longer term, 72 per cent of the respondents said, they were likely to increase their investment in the region over the next two years, higher than the proportion expecting an increase in allocation to other regions.
Sydney, Melbourne and Tokyo were the three most preferred destinations, while tier 1 cities in mainland China occupied the fourth spot. Singapore took the ninth spot.
"Hong Kong is a very liquid market, with large deals and is still very much liked by investors, as seen with Gaw Capital's US$1.27 billion purchase of Cityplaza One in Taikoo Shing and Kailong's US$124.5 million purchase of Hang Fat Industrial Building in Cheung Sha Wan. But other markets, such as Australia and Japan, tend to be a lot more accessible to foreign investors and are larger in size, which in turn make them more attractive destinations in the rankings," Delaunay said.
Hong Kong declined in a survey conducted by CBRE as well. The city ranked 14th while Tokyo, Singapore and Seoul were the most attractive investment destinations, according to the 2021 Asia Pacific Investor Intentions Survey by the global commercial real-estate services company, which polled more than 490 investors based in the region in November and December last year.
Hong Kong was the seventh and eighth most attractive cross-border investment destination in the 2019 and 2020 surveys, respectively. "While Hong Kong SAR fell out of the top 10, several foreign investors are understood to be considering opportunistic plays in this market following the recent price correction," CBRE said.
Tokyo retained its position as the most preferred city for cross-border investment owing to high-quality assets and strong liquidity, the survey found. Gateway cities such as Singapore also remained attractive.
"Although Hong Kong had fallen out of the top 10, we have seen a revived interests from funds and institutional investors. A notable transaction was the acquisition of Cityplaza One by Gaw Capital," said Henry Chin, global head of investor thought leadership and head of research, Asia-Pacific at CBRE.
Other noteworthy movements included Seoul and Ho Chi Minh City, which have entered the top three and top five rankings, respectively, for the first time. Another first was the presence of three Chinese cities in the top 10 rankings, indicating a confidence in China's recovery, CBRE said.
Hong Kong's office assets, on the other hand, remained attractive. The city also ranked fourth behind Sydney, Melbourne and Singapore, according to Colliers' inaugural 2021 Global Investor Outlook.
"Offices in key regional centres like Sydney, Melbourne, Singapore and Hong Kong SAR are a key area of focus for regional investors, with the pandemic seen as likely to accelerate a shift towards higher-quality assets that meet rising demand for health and sustainability," Colliers said.
This article originally appeared in the South China Morning Post (SCMP), the most authoritative voice reporting on China and Asia for more than a century. For more SCMP stories, please explore the SCMP app or visit the SCMP's Facebook and Twitter pages. Copyright © 2021 South China Morning Post Publishers Ltd. All rights reserved.