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Hong Kong property
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Colliers revises 2023 forecast, says Hong Kong commercial property investment to decline by 65% as interest rates, economy weigh on sentiment

  • The investment market will remain subdued for the rest of the year, property consultancy says
  • Latest forecast of HK$26 billion in total investment follows a prediction of HK$35 billion Colliers made in July

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Window cleaners work on a high-rise building in Hong Kong’s Central. A sluggish economy and interest rate pressure will hamper the city’s investment market and overall business environment, the Colliers report says. Photo: May Tse
Cheryl Arcibal
Investment in Hong Kong commercial property this year is likely to fall 65 per cent year on year to HK$26 billion (US$3.33 billion), a 15-year low, as a slow economic recovery in the city and mainland China as well as elevated interest rates weigh on sentiment, property consultancy Colliers said.
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As recently as July, Colliers had estimated in a report that investment in office, retail and industrial spaces, serviced flats and hotels would reach HK$35 billion, a forecast well below the HK$73.4 billion worth of deals recorded in 2022, but stronger than the latest estimate. The report tracked property investment deals worth at least HK$100 million.

“While mainland China and Hong Kong’s [economic] recovery is dragging its heels, the [US Federal Reserve’s] interest rate is unlikely to drop much in 2024,” Colliers said in its report on Tuesday. “As such, the investment market will remain subdued for the rest of the year.

“Based on current transaction activity, we have adjusted our 2023 forecast volume to HK$26 billion. Distressed sales and hotel assets will retain their attractiveness.”

The Hong Kong government adjusted its full-year growth forecast in August to between 4 and 5 per cent from 3.5 to 5.5 per cent, saying that weak global trade would continue to hobble the local economy. Meanwhile, mainland China’s economy grew 4.6 per cent in the third quarter of this year from a year earlier, slower than the 6.3 per cent expansion recorded in the previous quarter.

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Interest rates in Hong Kong currently stand at 5.75 per cent after the Hong Kong Monetary Authority raised the city’s base rate 11 times in 17 months in lockstep with the Fed. As a result, the cost of borrowing in Hong Kong has risen to its highest level since December 2007.

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