Hong Kong cap rates flat in Q1 2024

Overall, the removal of special stamp duties helped improve market sentiment and demand.

Colliers said in its latest report that cap rates for Hong Kong’s office, retail, and industrial sectors were stable in the first quarter of 2024 compared to the previous quarter.

In its APAC Cap Rates Q1 2024 report, Colliers said it logged a low of 2.95% and a high of 3.9% for office cap rate. For retail, the low was at 3%, and the high at 4.75%, whilst industrial had a low of 2.85% and a high of 4.00%.

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Hong Kong’s decision to scrap special stamp duties on the property sector helped revamp market sentiment and demand from users and local buyers, Colliers said.

In terms of the commercial sector, Colliers said investors remain cautious due to the high cost of borrowing and concerns about economic performance.

End-users and local investors have primarily driven Hong Kong’s retail investment sector, with cap rate remaining stable, Colliers said. Rental performance remained generally healthy, but investors remain careful about purchasing retail assets, being mindful of the vacancy rate, it added.

Hong Kong’s industrial market remains a high priority for investors, the agency said. It noted the 9.7% import and 16.6% export figures for the first two months of 2024 helped keep the industrial market cap rate stable. 

Considering the whole APAC, Collier said 11 out of 19 markets recorded movements in cap rates. 

“Asian markets were generally stable, and the cap rate movements observed were mainly driven by oversupply and pressure on rents, causing the cap rates to rise,” said  CK Lau,  managing director of valuation and advisory services, Asia at Colliers.

“The oversupply situation in certain Asian markets will require time to absorb, and the pace will depend on overall business activities and the economy, putting pressure on rental growth,” he added.