Strata-title sales have staged a muted rebound but banks’ prudent mortgage policies are hindering cash-strapped investors from re-entering the market.

• En-bloc commercial volumes staged a modest rebound in Q3 with seven transactions registered totalling around HK$4 billion, as both local and Mainland investors returned for either high-yielding properties or older buildings with redevelopment potential.
• Strata-title sentiment was again subdued with the third wave of COVID cases delaying the anticipated recovery in the economy as well as the commercial investment market.
• While interest rates were at record lows, banks’ prudent mortgage policies hindered potential investors, especially the cash-strapped, or those without a long-standing banking relationship, from re-entering the market.
• More end users were evident in the Grade A office market on Hong Kong Island but most were still looking for discounted stock, with only a few vendors facing financial difficulties willing to entertain offers. The Kowloon office market saw very few deals concluded with corporate solvency a major concern in the area.
• While high-end retail continued to suffer, retailers in the F&B, mid-priced cosmetics and health products segments have taken up prime street shops they could never have afforded a few years ago.  Suburban retail performed well with its necessities focus, and several new investors were attracted to this segment as a result.
• More Mainland buyers re-entered the en-bloc market, while some of them exited the stratified segment due to financial concerns.  It is still premature to predict a full-blown return of Mainland money, but the increasingly difficult investment environment elsewhere may push some of the SOEs back to Hong Kong for portfolio diversification.