Despite the U.S. Federal Reserve’s latest 25bps interest rate hike in December, Hong Kong’s Best Lending Rate held flat while the 1M-HIBOR rose to 2.24%, the highest since Q3 2008.
Commercial property transaction volume (including deals worth more than US$10 million, excluding pure land sales and related transactions) increased by 29% q-o-q to HK$25.5 billion in Q4 2018, bringing the annual total to HK$142.5 billion, the second highest on record.
Purchasing activity in Q4 2018 was led by property funds. Major deals included a consortium led by GAW Capital paying HK$12 billion (HK$10,918 per sq. ft.) to acquire a portfolio of 12 neighbourhood malls from Link REIT.
Weak sentiment ensured office capital values fell by 0.9% q-o-q in Q4 2018, the first decline since Q3 2014, while office yields expanded by 4bps, the first uptick since Q3 2016. However, office capital values recorded full-year growth of 13.4% y-o-y, compared to 2.2% y-o-y for retail and 11.7% y-o-y for industrial property.