Published on 18 April 2006 at 04:02 pm
Filed in Property News for Hong Kong » Hong Kong Property Market Watch
Hong Kong is continuing to benefit from its close ties with rapidly developing China and this month the Hong Kong property market drew strong investor interest from both Morgan Stanley and the Australian industrial real estate investment trust Macquarie Goodman Group.
Both companies are expanding interests in Hong Kong as part of their bid to establish closer ties with China and to expand their general Asian interests according to statements released from both Morgan Stanley and Macquarie Goodman.
The Morgan Stanley Real Estate Fund bought out a majority holding in the Hong Kong based property company Sharma recently for an estimated one billion Hong Kong dollars. Sharma mainly owns and manages apartments and restaurants and currently has in excess of 90% occupancy rates on six month or yearly leases which return the company strong and healthy profits.
The acquisition of Sharma by Morgan Stanley is seen as being extremely important in terms of the Hong Kong property market as it boosts general investor confidence in a property market where some continually wonder about its long term sustainable profitability. Only a month ago a Hong Kong property analyst from Merrill Lynch stated that “real estate in Hong Kong is ex-growth” and that “developers will be lucky to sell as many apartments in the next 10 years as they did in the past 10 years.”
There are no such concerns at Macquarie Goodman Group however. They started their unlisted property fund in Hong Kong earlier this month in a bid to expand their Asian interests and to tap strong investor interest that exists in this particular market. The fund is an industrial property fund and currently holds warehouses and distributions centres and will be hoping to expand further in 2007.
Macquarie Goodman Group are also considering starting a second unlisted property fund in China next year and believe that Hong Kong will continue to be a good strong bet for investors as it plays a central role in the expansion of China. The Macquarie Goodman Hong Kong unlisted property fund has already attracted massive investment from eight pensions companies based in Australia and Europe and the company expects to sell more of its own personal stake to pensions companies in the coming weeks.
According to analysis of the Hong Kong property market and in particular real estate investment trust activity in the region by UBS the banking and financial services group, the region’s REIT market could grow to one billion US dollars in the next four to five years and with international property agency Savills predicting up to 20% increases in office rental rates in Hong Kong for 2006 the general consensus of feeling seems to be that Hong Kong property market prospects are positive.
