Turmoil in Hong Kong’s Commercial Real Estate Market: High Interest Rates and Declining Rental Incomes Drive Distressed Sales

Hong Kong’s commercial real estate market is experiencing significant turbulence due to a combination of high interest rates, shifting consumer habits, and broader economic challenges. One notable case is the Cubus building in Causeway Bay, a mixed-use tower that has been put up for sale due to financial difficulties. The building’s owners, including Phoenix Property Investors and a business entity linked to Sa Sa chairman Simon Kwok, are struggling with debt repayments after a sharp decline in rental income. With over a third of the building’s floors vacant, the property was recently listed for sale at HK$1.4 billion (US$180 million), a significant drop from its peak valuation of HK$2 billion. The situation with Cubus reflects the broader challenges faced by Hong Kong’s commercial real estate sector. High vacancy rates, falling rental income, and dwindling demand from global firms and mainland Chinese visitors have driven down property values across the board. Grade A office rents have fallen by 38% since their pre-pandemic high, while the retail sector has been hit even harder, with property valuations down by about 40%. This market-wide slump has forced many property owners into distressed sales, with nearly 75% of commercial real estate transactions this year falling into this category. Banks, long a key source of financing for the heavily-leveraged sector, are now grappling with rising defaults. For example, HSBC reported US$3.2 billion in commercial real estate loan defaults in the first half of 2024, a six-fold increase compared to the previous year. Despite some relief from a recent U.S. Federal Reserve rate cut, the underlying economic fundamentals remain weak, and experts do not anticipate a market recovery anytime soon. Analysts suggest that it could take until 2025 for the market to stabilize, with demand still tepid, supply abundant, and investor confidence shaky.   While larger, more established developers may be better equipped to weather the downturn, smaller firms and highly-leveraged companies are struggling under the weight of their debt. The overall outlook for Hong Kong’s commercial property market remains bleak, with few signs of immediate recovery.

Overseas Contracting Services Awards Ceremony: Turkey's International Success

The "Overseas Contracting Services Awards Ceremony", organized by the Turkish Contractors Association (TMB) with the participation of President Recep Tayyip Erdoğan, was held at an important hotel in Ankara. This event was organized to reward the companies included in the "World's Top 250 International Contractors" list published annually by ENR magazine, which is known in the international construction industry. In his speech at the ceremony, Minister Bolat emphasized that contracting and technical consultancy services abroad reveal Turkey's strategic position and economic potential. He pointed out that the technology and knowledge transfer provided by the sector increases the country's infrastructure and construction competence and brings foreign currency to the local economy. Bolat stated that the achievements of Turkish companies in international projects have contributed to Turkey's economic growth and diplomatic relations. Stating that Turkey ranks second after China in the number of contracting companies in the 2024 list of ENR Magazine, Bolat said that it ranks eighth according to international revenues. He emphasized that as of September, the project size of the overseas contracting sector reached 515 billion dollars. The information that 12,277 Turkish contracting projects are carried out in 137 countries offers an exciting opportunity for investors. Bolat stated that Turkish consultants have won projects worth $3.3 billion in 138 different countries and have an average annual income of $200 million. He highlighted the opportunities offered to the sector by the projects within the framework of Saudi Arabia's Vision 2030. Erdal Eren, President of the Turkish Contractors Association (TMB), also spoke at the ceremony. Eren explained that despite the difficult conditions of the past year, Turkey mobilized its domestic power for the reconstruction of the earthquake zones. "We are ready for any task for urban transformation," Eren said, underlining Turkey's goal of becoming a brand in the international arena. For investors, it is important to note that Turkish companies are not only contractors abroad, but also investors and operators. Eren emphasized that the export of construction materials has increased with the contribution of technical consultancy firms in international projects. The ceremony ended with the presentation of awards to the representatives of the companies included in the "World's Top 250 International Contractors" and "World's Top 225 International Technical Consultants" lists. These awards reinforce Turkey's influence and success in the global construction market.

Antalya lures not only holidaymakers but also foreign businesses

According to the news of Hurriyet Daily News Antalya, one of Türkiye’s most popular holiday spots where foreigners heavily buy residential properties, has also become a magnet for international investments.