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Hong Kong non-residential property distress eases, refinancing still hard
Non-residential transactions above HK$50 million rose to HK$22.3 billion in the first half of the year, according to Savills, but office and retail refinancing challenges remain for highly leveraged owners.
Financial distress in Hong Kong’s commercial property market has eased but has not been fully eliminated, analysts say, with highly leveraged owners still facing refinancing difficulties despite improved conditions.
Office and retail have been stuck in a multi year slump as new supply has outpaced demand, amid slower consumption and higher interest rates that contributed to loan defaults. Thomas Chak, head of capital markets and investment services at Colliers Hong Kong, said he does not expect defaults to increase noticeably from current levels, adding that transaction activity remains relatively resilient and that much of the valuation correction is already reflected in pricing.
In the first half of the year, Hong Kong recorded HK$22.3 billion (US$2.84 billion) in non-residential property transactions above HK$50 million, up 120.0% year on year, Savills said. Offices accounted for more than two thirds of that total, at HK$15.1 billion.