Foreign funds zero in on Hong Kong’s neighbourhood malls as next big investment opportunity
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Foreign funds are increasingly considering smaller malls and shopping centres in Hong Kong’s more residential neighbourhoods for investment purposes, with the idea of repackaging undervalued properties and capitalising on a rebound in the city’s commercial rental market.
Maggie Hu, an assistant professor of real estate and finance at the Chinese University of Hong Kong, said these funds found good deals in such malls.
“First, these funds are betting that these malls are undervalued with current maintenance and management. And with professional management and strategic upgrading, they can improve the exterior image and internal design with a better and innovative decoration and construction strategy, and then resell the malls at substantial profit after repositioning and rebranding,” she said.
“Second, in the past few years, the commercial rental market in Hong Kong has been in a downturn trend and is likely to rebound in the future. So, in terms of market timing, now is the lowest point to enter the market, to buy,” said Hu.
According to consultancy CBRE Hong Kong, full-year rents for retail spaces in Hong Kong rose 0.2 per cent in 2018, their first increase after four consecutive years of decline. And Lawrence Wan, head of advisory and transaction services for retail at CBRE, said: “Neighbourhood malls have far more potential – they are in the heart of local communities and enjoy stable sources of customers.”
