Date
20 January 2017
Despite headwinds facing high-end retailers and the subsequent downward pressure on commercial properties, interest in mid-range shopping malls may hold up better.  Photo: Link REIT
Despite headwinds facing high-end retailers and the subsequent downward pressure on commercial properties, interest in mid-range shopping malls may hold up better. Photo: Link REIT

What Link REIT disposals tell us about the property market

The slump in retail business is casting a big shadow over the property market.

But while reports of further downsizing plans of luxury vendors seem to suggest softening demand and more downside to asset prices, the strong demand for malls and car parks offered by Link Real Estate Investment Trust in a recent tender suggests otherwise.

The mall operator put up seven properties for sale. The selling prices were at a premium of 21-81 percent over their appraised values, according to Link.

“We are delighted with the strong response to the tender despite the concerns on market outlook. We have received a large number of bids from a number of investors,” said George Hongchoy, chief executive of Link Asset Management, manager of the REIT.

Listed firms, local private investors and mainland investors were among the bidders.

The seven properties fetched nearly HK$2 billion in total. If big investors are putting down some serious money, perhaps the prospects of the business aren’t as bleak as indicated by media comments.

In particular, Chinese investors are said to be snapping up properties in Hong Kong for their own use or as investment, as they keep expanding their overseas footprint.

The low interest rate environment also supports demand for properties that can generate a steady return.

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CG

EJ Insight writer

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