Hong Kong Office Rents Could Slide By 10% In 2023
HONG KONG – Market watchers at real estate consultancy Savills expects office rents in the city to drop by 10 percent for the whole of 2023 amidst elevated vacancy levels and concerns over Hong Kong and China’s economies, reported Bloomberg on Wednesday (5 July, SGT).
Data from Colliers also showed that the overall vacancy of Grade A office properties in Hong Kong reached nearly 15 percent in April, which is over three times the figure recorded before the pandemic in 2019.
Aside from that, the city’s commercial heart, Central, has witnessed a large increase in office stock for the first time in more than 10 years.
Nevertheless, the reopening of Hong Kong’s border with mainland China is forecasted to help the city’s office market in the long run.
However, demand for leasable office space in Hong Kong has declined significantly as financial institutions slash costs and let go of workers due to a fall in deal-making, while some global firms exited the city.
Exacerbating the situation is that tens of thousands of high-skilled workers left Hong Kong due to its draconian COVID rules following the imposition of the controversial national security law in 2020. As a matter of fact, the city suffered its largest workforce drop on record in 2022, leading to significant labour shortages.
Furthermore, deal-making in Hong Kong has plunged in 2022, with fundraising in the city’s bourse plummeting by about 70 percent from the level seen in 2021.
Fundraising this year is no better, despite expectations that tensions between China and the United States would result in more mainland Chinese companies listing in Hong Kong. At the end of June 2023, US$2.24 billion worth of shares debuted in the local stock exchange, down 17 percent from the same period in 2022. However, this marks the slowest first half since 2003, when Hong Kong was impacted by the SARS virus.