Investment deals in Hong Kong’s property market rose by 18 per cent in 2014 from the year before, as limited supply and resilient demand for residences proved positive factors, according to Cushman & Wakefield, the privately owned real estate services firm.

Investment deals in Hong Kong’s property market rose by 18 per cent in 2014 from the year before, as limited supply and resilient demand for residences proved positive factors, according to Cushman & Wakefield, the privately owned real estate services firm.

Last year, the number of investment cases above HK$100 million ($12.9 million) increased by 13 per cent year-on-year to 254, while investment volume increased 18 per cent year-on-year to HK$86.4 billion.

Among the five major property types including hotels, investment volume was highest in office properties (HK$27.7 billion), followed closely by retail properties including composite buildings (HK$26.1 billion).

Investment volume of retail properties posted the strongest growth in 2014, having increased by 79 per cent year-on-year, followed by investment volume of industrial properties at 44 per cent. Office investment volume increased by 2 per cent last year from the year earlier, the report said.

“Strong performance in 2014 is attributed to investors' renewed confidence in the wider market facilitated by key factors including resilient residential demand and prices, limited non-residential supply, and in most sectors a still favourable leasing market. Local and PRC developers, end-users, overseas funds and local investors were active in executing purchases of tradable assets made available in 2014,” it said.     

The report added that investors have adapted to the Hong Kong government’s measures to cool property prices in recent years.

Office investment, it said, was highlighted by Citi’s purchase of the East Tower of One Bay East for HK$5.43 billion in the second quarter, as well as a concentration of investment in decentralised areas such as Kowloon East and Hong Kong South.

Purchases for self-use increased while investors continued to seek strata properties for rental returns, the report said. Office capital values rose by 3.1 per cent in 2014, while values in Kowloon East increased by 9.4 per cent.    

Retail property investment in 2014 was boosted by the Link REIT’s disposal of nine shopping arcades, and the shift of investment to non-prime and suburban locations. Most recently, Laguna Plaza in Kwun Tong was purchased by Fortune REIT for HK$1.92 billion, the largest retail transaction concluded this year.