The on-going US / China trade tensions, as well as the proposed Extradition Bill, have hit investment sentiment, with non-residential transaction volumes falling by half. Bargain hunting occurred in both the office and retail markets with cash-rich investors looking for distressed assets which proved hard to come by.
Investment sentiment was subdued by the US / China trade tensions as well as the controversial Extradition Bill and the social unrest which followed, with both transaction volumes and values falling by half over the first few months of the year.
The few office transactions recorded over the quarter were driven by either bargain-hunting veteran investors or by end users entering the market for the first time with limited pricing information.
Many office tenants who were actively looking to purchase their own premises a few months ago backed off from the sales market given the deteriorating sentiment, and many decided to renew their leases instead.
The core retail investment market was particularly hard hit by declining retail sales, with suburban retail remaining relatively unscathed, therefore becoming the first choice for many retail investors.
In a surprise move, Goldin Financial withdrew from the tender of a hotel / commercial site at Kai Tak pointing to ‘social contradiction and economic instability’.
With the reopening of trade negotiations between the US and China after the G20 Osaka Summit, more positive news is anticipated over the next few months, but the path to an ultimate trade resolution is not expected to be an easy one.
With recent local events also causing capital outflows as evidenced by rising HIBOR and a declining aggregate balance, the investment market looks set to endure another bumpy ride over the next three to six months.