MARKETVIEW Two major en-bloc office deals underpin jump in quarterly transaction volume Hong Kong Investment, Q4 2020 Strong capital inflows pushed up Hong Kongs aggregate balance to a record high HK$457 billion at the end of 2020. Commercial property investment volume rose to HK$32.7 billion in Q4 2020, underpinned by the sale of Cityplaza One and Goldin Financial Centre, which collectively fetched HK$23.8 billion. The strong end to the year brought full-year transaction volume to HK$52.9 billion, a decline of 23% y-o-y from 2019. While developers retain a cautious attitude towards acquiring land in locations lacking strong occupier demand, bidding for residential sites remains competitive. Despite climbing vacancy and falling rentals, some long-term investors are capitalising on discounted prices in the office sector. While capital values continued to trend down over the quarter, the rate of decline slowed across all sectors. The recent removal of the Double Stamp Duty (DSD) for commercial properties will provide the investment market with a much-needed boost in 2021. While investor sentiment will take some time to recover to pre-pandemic levels, lower transaction costs should stimulate investment demand from end-users. Q4 2020 CBRE Research 2020 CBRE, Inc. | 1 -4.2% q-o-q Flat -4.9% q-o-q +402% q-o-qMARKETVIEW Q4 2020 CBRE Research 2020 CBRE, Inc. | HONG KONG INVESTMENT Figure 1: Total Investment Turnover Figure 2: Capital Values Source: CBRE Research, Q4 2020 Source: CBRE Research, Q4 2020 Figure 3: Yields Source: CBRE Research, Q4 2020 2 -20 20 60 100 140 180 0 20 40 60 80 100 120 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 HK$bil Billions Office Retail Industrail Hotel No. of deals (RHS) 0 100 200 300 400 500 600 700 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Warehouse CV Index Retail CV Index Office CV Index Index (Q1 2005 = 100) 0% 2% 4% 6% 8% 10% 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Yield Warehouse Yields Retail Yields Office YieldsMARKETVIEW Figure 4: Selected investment transactions in Q4 2020 Building Name Sector Transactio n Type Consideration (HK$) GFA (sq. ft.) Unit Price (HK$/sq. ft.) Location En-bloc, Goldin Financial Global Centre Office En-bloc 14,000,000,000 852,433 16,424 Kowloon Bay En-bloc, Cityplaza One Office En-bloc 9,845,436,000 630,000 15,628 Quarry Bay En-bloc, Sing Pao Building Office En-bloc 1,700,000,000 171,000 9,942 North Point Whole floor, 48/F, The Center Office Strata-title 980,000,000 25,695 38,140 Sheung Wan En-bloc, Hang Fat Industrial Building Industrial En-bloc 965,000,000 190,044 5,078 Cheung Sha Wan G/F-1/F, 407-409 Shau Kei Wan Road Retail Strata-title 320,000,000 32,330 9,898 Kowloon City En-bloc, Ideal Plaza Industrial En-bloc 310,000,000 88,546 3,501 Tsuen Wan Outlook Q4 2020 CBRE Research 2020 CBRE, Inc. | 3 HONG KONG INVESTMENT Source: CBRE Research, Q4 2020MARKETVIEW Disclaimer: Information contained herein, including projections, has been obtained from sources believed to be reliable. While we do not doubt its accuracy, we have not verified it and make no guarantee, warranty or representation about it. It is your responsibility to confirm independently its accuracy and completeness. This information is presented exclusively for use by CBRE clients and professionals and all rights to the material are reserved and cannot be reproduced without prior written permission of CBRE. CONTACTS CBRE HONG KONG OFFICES HONG KONG INVESTMENT