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Asset managers look to sell HK buildings due to high interest rates

Asset managers are selling off their commercial buildings in Hong Kong as escalating interest rates negatively impact mortgage payments, some of which now surpass rental earnings. This trend is exacerbated as mortgage loans approach their refinancing periods, especially when the equity in assets decreases. Despite Hong Kong reopening its borders post-pandemic, the anticipated recovery in commercial property sales and rentals has faltered due to climbing interest rates and a stagnant global and China economy. Office values have plummeted over 30% since their 2019 zenith, affected by anti-government protests and COVID-19. Cushman & Wakefield data reveals a 34% drop in average rents and a surge in vacancy rates to 17.3% by June’s end. Notably, KaiLong Group is offering two of its buildings at possibly discounted rates, aiming for HKD1.5bn and HKD1.25bn, respectively.


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