HK office market on downward trend: report

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Grade A office space will decline while rents will drop by five to 15 percent, according to Cushman and Wakefield’s forecast for the Hong Kong and Asia Pacific property markets.

Overall Q4 office rents have dropped by 4.0 percent quarter-on-quarter to HK$69.60 (S$11.27) psf per month. Office availability rate, on the other hand, dipped to 3.6 percent from 3.9 percent in the previous quarter.

It added that average monthly rents across Greater Central (including Sheung Wan, Central and Admiralty) fell to HK$118.30 (S$19.16), marking a 5.9 percent quarterly decline and the biggest drop among all districts.

“Occupants of Greater Central office buildings have cut or even halted their expansion of office space amid unfavourable factors, such as the European sovereign debt crisis, global economic uncertainties and lacklustre performance of the local stock market,” said John Siu, Executive Director at Cushman & Wakefield (Hong Kong).

“Landlords are not optimistic about the economy in 2012 and have lowered asking prices in addition to offering more flexible lease terms and conditions in order to entice renewals and attract new tenants.”

Jonathan Sullivan, Research Manager at Cushman & Wakefield (Hong Kong), said 418 new leases of Grade A office space comprising a total floor area of 3.63 million sq ft “were recorded in the territory in 2011,” with 229 of these leases to be executed in H1 2011 and 189 in H2 2011.

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