HK’s First Lockdown May Hurt Office Market

HONG KONG – The implementation of the first lockdown in the Chinese territory could scare off would-be property buyers as well as potential tenants in the office market, which has already been badly affected by protests and the COVID-19 pandemic.

The authorities will only lock down Yau Tsim Mong in the heart of Kowloon. While it’s an older, lower-income district, it’s a short walk away from major office towers, such as the International Commerce Centre, which houses Credit Suisse Group and Morgan Stanley, reported Bloomberg on Friday morning (22 January).

The looming lockdown was first reported by the South China Morning Post (SCMP) earlier on Friday. It said Hong Kong’s government plan to start the lockdown this weekend to control a worsening virus outbreak in Yau Tsim Mong, which contains older buildings and subdivided flats.

Even a limited lockdown would be considered harsh in Hong Kong, which has some of the smallest homes in the world, with apartments typically measuring around 500 sq ft on average. It’s also not uncommon for poorer households to have just enough space for a bed, with communal kitchen and toilets in their apartments. More importantly, this set-up makes it hard for them to work from home.

This is the first lockdown imposed in Hong Kong, whose government was hesitant to introduce such restrictions due to fears it could trigger further social unrest. It’s also the most severe step taken by the authorities to control the spread of COVID-19, but it’s likely to impact the government’s attempt to keep the city’s economic cogs operating during the health crisis.

A source familiar with the situation told SCMP that only residents with negative COVID-19 test results will be permitted to exit Yau Tsim Mong. Even those who tested negative would be requested to stay in their homes as much as possible. But exemptions will be made for residents travelling for medical reasons, and those who are facing undue hardship.

The decision to lock down the district comes after sewage testing devices recently installed there revealed concentrated traces of the deadly virus.

“Persistently high and spreading infection (in the vicinity) and sewage surveillance suggest the outbreak is not yet under control, and many silent sources still exist within the area,” explained the source.

The government will only remove the lockdown after everyone in Yau Tsim Mong has been tested for COVID-19.