US Brokerage Newmark Braves Real Estate Downturn to Open Hong Kong Office

Real estate investments in Hong Kong dropped 46 percent during the first quarter of 2022 but the challenges of falling asset values and sliding rents have not deterred New York-based real estate agency Newmark Group from opening an office in the city this week.

Aiming to gain a foothold in industrial and commercial leasing, Newmark, which ranked fourth among real estate service firms in the US last year, introduced six veteran brokers as leaders of its team in Hong Kong, led by former CBRE executive Rhodri James, who holds the titles of vice chairman and head of Hong Kong.

“Newmark’s Hong Kong office represents a notable milestone as we further expand and  strengthen the company’s reach internationally,” said the firm’s chief executive officer Barry Gosin in a statement. “Solidifying our foothold in APAC with top Hong Kong commercial property advisors underscores Newmark’s commitment to recruiting the best-of-the-best talent to meet the increasingly global needs of our clients.”

Newmark, which formerly worked in partnership with Knight Frank in the US, is expanding into Asia’s most expensive real estate market following a year which saw the company’s revenue jump 52.6 percent year-on-year to $2.9 billion, recording the highest full-year revenues and earnings in the company’s history according to its 2021 financial results.

Leasing Focused

James, who has 25 years of experience in advising landlords, tenants and investors on office deals in Hong Kong and around the region, is joining the firm from CBRE Asia Pacific, where he formerly served as vice chairman of advisory and transaction services based in the city.

“The team will initially focus on office and industrial leasing,” James said. “Our goal is to work on large, blue-chip transactions and with high-quality clients.”

Also joining from CBRE is managing director James Catterall, who will specialise in office leasing for Newmark after having served as an associate director in his previous role.

John Davies, who led Colliers’ Kowloon office and industrial team for much of last year after 14 years at CBRE, is also joining Newmark as a managing director, as is Terry Shum, who was an office services director at Colliers for several months last year after stints at Savills, Knight Frank, CBRE and JLL.

Serving as associate directors at Newmark will be Charles Saudeau and Cole Pamuk, both of whom will be part of the leasing team after holding similar positions at CBRE.

Newmark’s crew of veteran brokers will get a chance to prove their skills this year after tenants in Hong Kong surrendered 578,700 square feet of office space in the city during 2021, according to figures from Cushman & Wakefield.

While the market has shown signs of pulling out of that power dive, grade A office rents in the city declined by 2 percent during the first three months of 2022, according to a recent report by Savills.

Investment Aspirations

The company is also focused on investment deals in Hong Kong, with Davies having been part of the capital markets team during his years at CBRE.

“On the investment side, Hong Kong’s local investors’ holding power is strong. In recent years we have also seen many regional and global new entrants in the Hong Kong property sector,” Davies said, citing private equity firm PAG’s purchase of the International Trade Tower (now the Manulife Place) in 2019.

“We expect this trend to continue in Hong Kong as we enter a period of stability in Hong Kong’s mature property market – there are more to come in the pipeline,” he added.

Newmark remains confident that Hong Kong is “a central point in the Asian market” despite a recent prediction by Colliers that the volume of investment transactions in the city would edge down 5 percent in 2022 to HK$70 billion.

Cross-Border Connections

Newmark unveiled its new brokerage team around six months after the firm had hired former Brookfield Financial partner Frederick Wong as executive managing director for Asia Pacific with its International Capital Markets group, based in Hong Kong.

“Frederick’s hire reflected Newmark’s effort to capture a greater share of the rising tide of foreign investment into US commercial real estate – Newmark has executed over $40 billion in U.S. capital markets transactions with offshore investors over the past five years,” James said.

Globally, Newmark advised on more than $138 billion of capital markets transactions in 2021, said Alex Foshay, vice chairman and head of the firm’s International Capital Markets group.

Earlier this month it was revealed that Newmark’s US team had assisted an HSBC joint venture to arrange a $590 million refinancing of the 1540 Broadway tower in New York City’s Time Square, and during April also assisted South Korea’s Mirae Asset Global Investments in securing financing for its $190 million purchase of a distribution centre in Texas.