Hong Kong Tenants Cautious On Expanding Office Footprint
HONG KONG – A survey of 321 tenants by Colliers show that office occupants from different sectors from banks to manufacturers have adopted a cautious stance in regards to expanding their existing property footprint in the city, further dealing a blow to Hong Kong’s beleaguered commercial property market, reported Bloomberg on Thursday (7 September, SGT).
Specifically, tenants in the shipping and manufacturing industries are most likely to reduce their office space over the next two years because of heightened trade frictions and muted global demand. In the finance and insurance sector, around 50 percent of the respondents intend to retain their office footprint in the same period.
Among the sectors, only the information technology industry is the outlier, with the majority of respondents from this sector expecting to increase their office footprint in the next two years.
The main driver why companies plan to downsize their office space is no longer the work from home trend that arose during the COVID pandemic. Instead, businesses are motivated by managing costs, adapting to slowing business demand, and exiting out of Hong Kong.
The results of the research should compel office landlords in districts containing IT and financial companies to “approach and capture these occupiers early,” urged Fiona Ngan, Colliers Hong Kong’s Head of office services.
“Landlords should also be flexible when it comes to rental levels, considering that cost saving is the major concern in this competitive market,” she added.
Meanwhile, Bloomberg reported on Thursday evening that Sun Hung Kai Properties, the biggest real estate developer in Hong Kong, saw a 17 percent fall in full-year profit as the Chinese territory’s property market continues to face difficulties amid interest rate hikes.
In particular, Sun Hung Kai Properties was impacted by Hong Kong’s sluggish office market as the city’s office vacancy level reached an all-time high as businesses slash costs and office stock rises.
“A number of factors such as an uncertain global economic outlook may affect the pace of economic recovery in Hong Kong,” explained the real estate developer.
Looking ahead, CBRE expects office rents in Hong Kong to drop by up to 5 percent for the whole of 2023.