Opportunities abound in Hong Kong key real estate sectors

CBRE’s Frederick Lai points investors in the right direction amid Hong Kong’s evolving real estate landscape.

Hong Kong’s commercial real estate market is poised for a rebound, buoyed by the trends of economic normalisation and the anticipation of rising interest rates.

As investors and industry experts navigate these evolving dynamics, Frederick Lai, senior director of capital markets at CBRE Hong Kong, underscored the importance of discerning sectoral prospects over categorising investors as local or overseas.

“I think it’s more important to kind of find the right sectors to be investing in and kind of follow the trends that have the best prospects,” Lai told Hong Kong Business as he cited two key sectors with promising growth potential in the coming quarters and years.

The first is the living and lodging sector in the context of Hong Kong seeing an influx of talent, labor, and non-local students, which consequently prompts a growing demand for housing.

Lai recommended that investors take notice of the living and lodging sector, suggesting that it could be adapted to meet this evolving housing demand.

As the city transforms into a regional hub for education and innovation, he believes strategic investments in residential and student accommodation properties could yield substantial returns.

The second sector which Lai said he feels optimistic about is tourism. In particular, he suggests that astute investors recognise the opportunity in revamping tourism-related properties.

He cited the potential of older retail and hotel properties that are in need of refurbishment or modernisation. With the changing preferences of consumers and travelers, there's a clear demand for upgraded facilities that cater to contemporary needs, he said.

This niche provides a chance for investors to reposition existing properties and tap into the revitalised interest of both tourists and locals.

In terms of the recent easing of residential mortgage rules, Lai acknowledged that whilst this policy change may facilitate homeowner upgrades to larger properties, the high interest rates and cost of financing remain key hurdles for investors.

“It’s making deals very hard to transact and pencil at the moment,” he said. “So, until that changes, I don’t think the other policy will really have too much of an effect on the investment market in Hong Kong.”

In a city where property investment has historically held strong allure, the current landscape calls for a strategic approach.

The CBRE expert stressed the significance of monitoring sectoral trends and considering evolving demands.

As Hong Kong charts its course towards economic recovery and normalcy, the real estate market reflects both challenges and prospects. The key, according to Lai, lies in the ability to discern and act upon these trends, ensuring that investments align with the evolving demands of the city’s dynamic landscape.

He said understanding sectoral dynamics and responding to evolving demand are essential for investors looking to make the most of Hong Kong’s evolving real estate scene.

With the convergence of economic normalisation and changing interest rate scenarios, the city’s property market offers avenues for growth that can be harnessed by those who remain vigilant and adaptable.

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