The commercial property market is not as exuberant as it used to be, and transaction numbers and prices are no longer staying high due to various challenges. However, there is no lack of short-term speculation in the market.
A street-level shop on Electric Road in North Point was sold for HK$18.8 million at an average price of HK$37,600 per square foot.
The vendor is investor So Siu-yung, who has overseen a 57-percent appreciation in price of the property in just six months.
The shop is being occupied by Luck Store at HK$40,000 per month, an expected return of 2.3 percent.
So bought the shop in January for HK$13.3 million, making for a profit of HK$7.7 million in less than half a year.
Speculative activity in the sector has plunged in recent years, but fortune favors the brave and So's jumping into the market to snap up a row of four commercial addresses in the past few years has seen him reap between 28 and 70 percent on his investments.
For one real estate agent, investing in commercial property is a sideline for So, as his main occupation is in science and technology.
Now in his 50s, So still manages to be aggressive in his investment approach and believes there are still business opportunities to be had in the off-peak market.
In February, he sold a ground-floor shop in Sai Wan Ho Street for HK$8.1 million, which was a 40-percent increase over the price he paid for it just four months ago.
The unit - Shop D on the ground floor of Hing Chung Building at 134-136 Sai Wan Ho Street - was sold off at an average price of about HK$16,200 per sq ft and came with a gross floor area of about 500 sq ft.
So bought the shop in September for HK$5.8 million and made a profit of HK$2.3 million.
Last May, he sold a unit, shop five, on the ground floor of Chuang's Heights, 30 Factory Street in Shau Kei Wan, which came with a gross floor area of about 435 sq ft, for HK$13.2 million, which was 74 percent up on his buy-in price of HK$7.6 million.
With a new tenant, a vegetable and fruit seller, paying a monthly rent of HK$32,000, its return is about 2.9 percent.
In January 2020, So sold shop seven on the ground floor of 271 Lockhart Road, Jie Yang Building, Wan Chai, for HK$12.2 million. He bought it in August 2019 at HK$9.5 million.
With an area of about 200 sq ft, he earned a profit of HK$2.7 million, or about HK$61,000 per sq ft.
The previous owner, who purchased the property in 2011 for HK$13.3 million, had seen the value of the property depreciate by about 28 percent in those eight years.
Separately, a property agency data showed that the market saw a total of about 308 commercial and industrial shop transactions in June, a month-on-month decrease of about 11 cases, or 3 percent, for three months in a row.
An agent said turnover for the month was about HK$3.824 billion, a month-on-month drop of about 7 percent, bringing a new monthly low in the first half.
He added that the main reason is the lack of large-value transactions, with the market seeing individual transactions of more than HK$100 million each and amounting to around HK$1 billion.
The number of transactions and turnover were down by about 50 and 60 percent, respectively, compared to the same period last year, the agent said.
He noted that transactions involving industrial buildings were more prominent last month, with a total of about 206 transactions recorded, accounting for more than 60 percent of the total.
As for the commercial market, 66 transactions were recorded last month, a drop of about 10 percent from the 75 recorded last month.
Turnover for the commercial market dropped most significantly from HK$1.685 billion to HK$1.463 billion, or about 13 percent in month-on-month terms.
Despite this, Poon is still optimistic about the market as the summer holiday is nearing, and he expects the second round of consumption vouchers to give a boost to retailers.
