Hongkong Land’s Office Vacancy In Central Falls
HONG KONG – Hongkong Land, one of the biggest office landlords in the Chinese territory, announced that its office portfolio in Central continued to perform well overall despite the current market downturn, according to the group’s latest financial results (FY2021) that were published on Thursday evening (3 March, SGT).
For instance, the physical vacancy of its office buildings in Central declined to 5.2 percent at the end of 2021 versus 6.3 percent at the end of 2020. On a committed basis, vacancy fell to 4.9 percent from 5.9 percent previously. In comparison, vacancy for Hong Kong’s overall Central Grade A office market rose to 8.0 percent at the end of 2021 from 7.3 percent at the end of 2020.
“The group’s Central office portfolio, underpinned by its high quality and unique positioning, performed well despite rising office vacancies across Hong Kong. New leasing activity saw modest improvements throughout the year as a result of improved sentiment and a narrowing rental gap between Central and other parts of the city,” stated Hongkong Land.
Another good sign is that the contraction in Central office rents was smaller as compared to the broader market. The group’s average office rent in 2021 reached HK$117 psf, down from last year’s average of HK$120 psf. However, rental reversions in 2021 were negative, reflecting the decline in office rents since the start of the COVID-19 pandemic.
The commercial property landlord revealed that financial institutions, legal firms and accounting companies occupy 82 percent of the group’s overall leased office space in Hong Kong’s Central. The weighted average lease expiry (WALE) of its office portfolio there at the end of 2021 stood at 4.2 years compared to 4.6 years at the end of 2020.
Meanwhile, the WALE of Hongkong Land’s office portfolio in Singapore fell to 3.4 years in 2021 from 3.8 years in 2020. Financial institutions, legal firms and accounting companies occupy 76 percent of the group’s overall leased office space there.
On a committed basis, vacancy in the group’s office portfolio in the city-state remained low at 2.9 percent versus 2.1 percent at the end of 2020. Comparatively, the overall vacancy of the entire Grade A office market in Singapore’s central business district (CBD) was 8.6 percent at the end of 2021 compared to 6.8 percent at the end of 2020.
“New leasing activity at Hongkong Land’s Singapore portfolio showed signs of recovery in 2021. The group’s office portfolio continued to perform well, with positive rental reversions achieved during the year. Average office rent increased to S$10.3 psf in 2021, up from S$9.9 psf ft in the previous year,” added the group.