Why IPOs are surging in Hong Kong

Busiest year for IPOs in a decade comes as property services listings hit record amount

January 27, 2021

Hong Kong recorded its busiest year for initial public offerings (IPOs) in a decade in 2020, with newly-listed companies raising US$50 billion (HKD387 billion). 

The city’s bourse has benefitted from new economy companies – typically technology focused – which accounted for close to 60 percent of IPOs. This is partially the result of 2018 listing rules that allow pre-revenue biotech and new-economy companies with non-standard share structures to raise capital.

Biotech and property services are among the other sectors that drove listing activity over the past year. Around US$6.5 billion (HKD50.6 billion) was raised from the real estate sector, the highest on record, according to Bloomberg.

Last year, several major Chinese mainland real estate developers spun off their property-services units in efforts to raise funds to fuel growth. This included China Resources Mixc, the property management arm of China Resources Land; Evergrande Property Services under China Evergrande Group; and KWG Property’s KWG Living.

“Hong Kong is still a natural choice for Chinese companies because of its robust financial system and the advantages of cross-border investment channels made available through the Hong Kong-China Stock Connect scheme,” says Wendy Chan, growth director for the Greater Bay Area at JLL, specialising in valuation and advisory services. 

The property companies intend to use the proceeds to make strategic investments and acquisitions to expand its property management and commercial operational businesses, pursue investments in providers of value-added services and invest in information technology systems. 

“We expect the impact of the COVID-19 outbreak on China’s property management market to be limited in the long run because of the market’s sheer size. The current gross floor area under management and property management fees won’t be affected,” says Chan.

Attracting REITs

Hong Kong is also home to Champion REIT, one of the largest REITs in Asia in terms of market capitalisation.

This could continue to increase. Last June, Hong Kong’s Securities and Futures Commission proposed enhancements to the Hong Kong REIT Code, which aimed to give the structures more flexibility in making investments, including a potential relaxation of the investment restrictions, and broadening the investor base and option available.


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Should the proposed enhancements be implemented, they will increase Hong Kong’s competitive advantage and spur more REIT listings, says Chan.

“In terms of the new issuance of REITs, the logistics sector will be the most natural asset class to take advantage of the liquid capital markets and investors’ demand for yield,” says Theo Novak, executive director for Asia Pacific capital markets and head of international investments for Greater China at JLL.

Top destination

New economy, renewable energy, and property infrastructure will likely dominate Hong Kong IPO activity in 2021, say experts in JLL’s valuation and advisory services team for Greater China. 

Hong Kong is expected to remain among the top three IPO markets globally in 2021, along with the Nasdaq and Shanghai. In 2020, JLL accounted for approximately 40% of the market share for business valuations in the Hong Kong IPO market.

“There is a lot of cash in a low interest rate environment, bringing a new era for corporates to transform themselves. 2021 will be a ‘year 0’ for corporates to transform themselves in the capital markets,” says Simon Chan, executive director who heads up the business valuation team for JLL's valuation and advisory services in Greater China.

Contact Wendy Chan

Greater Bay Area Growth Director

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