Hong Kong dethroned the city of Tokyo as the best destination for commercial real estate investment in Asia Pacific in the first half of the year.
According to the latest research by Real Capital Analytics, the completed sales of income-producing assets in Hong Kong reached US$8.3 billion, a 5 percent uptick on the same period earlier.
This is the first time the city cracked the top of the list. The Japanese capital city suffered a 33 percent drop in investment during the period as high prices and anaemic suitable stock eased the investment activity. Tokyo recorded US$6.2b sales volume during the said period.
RCA Senior Director of Analytics for Asia Pacific Petra Blazkova said there were six mega deals involving development sites in the first half of the year, which highlights how the scarcity of land in the city is during the market.
"The Hong Kong market has reached a new peak in property pricing while attracting huge inflows of Chinese capital as well as demand from the territory's own robust investor base," Blazkova noted in a statement.
The biggest completed deal of an income-producing asset in Hong Kong was Pioneer Global's HK$7.7 billion purchase of the 503-room InterContinental Hotel.
Meanwhile, the study revealed that Shanghai and Singapore trails behind Tokyo. Less than half a billion dollars separates Tokyo and Shanghai whilst Singapore is in the firm fourth position.
Singapore's investment market grew 50 percent to US$5.8b, reaching its highest position on the leaderboard since 2013. A joint venture of government-linked investors bought the Jurong Point shopping mall for US$1.6b.
On the other hand, Shanghai investment volume jumped 43 percent to US$5.9b
South Korea's Seoul completed the top five APAC destination for commercial real estate investment market. Total investment in the city hit US$3.6b.
The RCA study also found out that the Australian cities Melbourne and Brisbane dropped in the rankings, both are at the lowest points since the Global Financial Crisis. Sydney Australia's sixth position is the lowest since 2011.
"Australia has been a major destination for Chinese investors and the flows will probably slow as the capital controls imposed by Beijing start to bite. Record prices mean investors are content to sit out the market until cheaper buying opportunities arise, while owners are unwilling to sell assets at a perceived discount," Blazkova said.
She furthered,"The stand-off in the Australian market is unlikely to change anytime soon and we can expect to see record high pricing with low transaction volumes to remain a feature going forward," Blazkova commented.
