HK Office Market On The Cusp Of Recovery
HONG KONG – The Chinese territory’s currently sluggish office leasing market appears to have reached its trough, with real estate agents seeing more rental enquiries and office rents expected to rise by the end of the year, reported the South China Morning Post (SCMP) on Sunday evening (2 April, SGT).
In fact, Hongkong Land witnessed a monthly uptrend in office rental enquiries – 21 in January, 39 in February and 46 as of 28 March – after the reopening of the city’s border with mainland China.
“Forty-six is very high,” said the developer’s Director and Head of office and commercial property, Neil Anderson. “We’re not going to be doing deals with every single inquiry – that’s just the nature of the business. But in terms of the level of demand, and how busy we are as a business, that does kind of tell you that things are looking a lot more optimistic and healthier. Transaction volumes will come later.”
In comparison, Hongkong Land registered fairly low rental enquiries in the past three years, with some months being pretty grim.
“It’s fair to say we’re talking single digits. I think there was one month where we had eight.” Notably, Hongkong Land owns 4.9 million sq ft of commercial property, including office space, in Central.
Colliers’ Head of office services in Hong Kong Fiona Ngan shared that office rental activity in the city has been very active recently. As a result, commercial property owners have greater confidence and are panicking less.
Knight Frank agrees with Ngan. In a recently published report, the property consultancy stated that Hong Kong’s office sector registered stronger activity in February as market sentiment improved alongside a rebound in economic activity, but office rents still declined marginally.
Since 2020, overall office rents in Hong Kong have plunged by about 22 percent, but Ngan noted that the rental decline has slowed this year, with office rents sliding by just 0.8 percent in March 2023. Thanks to the more favourable market situation, she thinks that overall office rents in the city could rise by around 3 percent for the whole of 2023.