Grade A office is transformed into an investment graveyard market

In August, the recent property market is sluggish, and the transaction volume of first-hand properties has decreased from more than one hundred to less than dozens of units each week. Recently, the transaction price of one low-rise unit in The Center fell by 60% from previous record-high level. Indeed, the price slid from HK$33,000 to HK$ 13,000 per square feet (psf). Therefore, the valuation of the 1.4 million square foot in The Center will be lowered across the board. The sales area of each floor of The Center is approximately 26,000 square feet. The market value of each floor will drop from a record high of HK$ 858 million to 338 million now.

The valuation of The Center plummeted, and all owners suffered heavy losses. In 2017, a joint venture company that was established by some of the most prominent office investors in Hong Kong purchased 75% of the office floor of The Center by HK$ 40.2 billion, and each investor was allocated to two to thirteen floors. Looking back those days, those enthusiastic investors have fallen into a black hole without sense of danger. Their total loss of Hk $ 520 million per floor is in average.

The price of The Center collapsed. Analyzing from the narrow point of view, many prominent office investors were eliminated. Broadly speaking, the above-mentioned low-price transaction indicated that the value of Hong Kong's Grade A office had been boarding on the roller-coaster riding through prosperity to decline in seven years. At this moment, Grade A office has been transformed into an investment graveyard market. Therefore, Hong Kong's status as a global financial center has been withered from what it used to be.

Shops and commercial markets have fallen one after another, and these two types of property have been utilized as a shortcut to wealth in the past few decades. Both of these two sections of premises have slid from the altar, and the cornerstone of brick culture has been loosened. Property investors gained no solid support from shops and commercial markets now. With the price of Grade A office being cut in half, the real estate tycoons are facing tremendous pressure. Those who can successfully survive in this tough time should thank God heartily.