In Hong Kong SAR and in Mainland China, we have observed an increase in the relative bargaining power of office tenants to negotiate their leases. A variety of factors, including a stronger supply of new office buildings and more negative economic sentiment among office tenants, have contributed to the evolution of landlord-tenant dynamics.

Read our first report that reveals how the “green premium” is impacting commercial real estate values, with over 71% of investors expecting properties with strong energy performance standards to have a higher resale value than an equivalent property with lesser energy credentials. Sustainability is shaping the commercial real estate market.

The Policy Address 2023 was delivered by the Hong Kong SAR Chief Executive, John Lee (“CE”) on 25 October 2023. In addition to some expected initiatives to further promote the principle of “One Country, Two Systems” and further enhancements of National Security, the CE has introduced 73 new initiatives in what was probably one of the longest ever policy address speeches.  Alongside the key initiatives to increase land and housing supply, the CE is also promoting various real estate, infrastructure and development projects to combat the slow-moving economy and a lacklustre property market. We set out a list of key takeaways which are relevant to our firm’s practice in the real estate and infrastructure space. There are also other key areas which others may focus on such as the long awaited need to reform the GEM listing approach.  A new listing route for R&D focussed companies will be created with new Listing Rules being promised for Q1 2024. An important boost for the financial services sector.

A common route for property owners to effect divestiture of their real estate assets to de-risk their investments and to improve liquidity is to sell down part of the asset and form a joint venture with the buyer. Alternatively (or as a hybrid), an owner may sell the whole or part of its properties – but on the basis that it receives a lease back immediately on completion so that it can continue to use the property (or properties). In this third article in our “Improving Liquidity for Asian Real Estate Investors” series, we explore sale and leaseback arrangements and how these arrangements can help de-risk investments and provide liquidity for real estate investors in Asia. In case you missed them, you may be interested in Part 1 and Part 2 in the series which examined the key issues that Asian real estate investors should consider if they are contemplating a partial sale and entering into a joint venture with a new capital or operating partner. 

In this second article (in our three part series which explores joint venture and sale and leaseback arrangements for Asian real estate investors), we examine some of the key economic considerations that investors should bear in mind when considering selling down interests and forming a joint venture (JV) involving Asian real estate: (i) funding, (ii) distributions and waterfalls and (iii) exit mechanisms.   In case you missed it, the first article in the series 'Improving liquidity for Asian real estate investors - Part 1' where we discussed some of the other key JV considerations for Asian real estate investors (e.g. structure, governance and control, conflict of interests and deadlock) is available for you to read.

Three years after the outbreak of COVID-19, restrictions have finally eased in Asia. However, investors in the region are still feeling its effects as well as headwinds caused by higher interest rates, rising inflation, supply chain constraints and tightening labour markets – not to mention the potential impact on the broader banking system of the recent failures of Silicon Valley Bank and Signature Bank in the US.  These are challenging times and Asian real estate investors have certainly not been immune to these challenges.   Investors in many locations (including Asia) are experiencing property market slumps partly driven by unfavourable revaluations by lenders and banks of mortgaged properties and the calling in of loans or the anticipated calling in of loans. This is a time when property owners may need to consider ways to de-risk their investments and to improve liquidity by divesting (wholly or partly) of their real estate assets.  A common route to effect such divestiture is to sell down part of the asset and form a joint venture with the buyer. Alternatively (or as a hybrid), an owner may sell the whole or part of its properties – but on the basis that it receives a lease back immediately on completion so that it can continue to use the property (or properties). In our three part series, we explore some of the key issues involved in these joint venture and sale and leaseback arrangements for Asian real estate investors.