Hysan Cautious On Hong Kong Office Sector
HONG KONG – Due to an imminent office oversupply situation, the biggest commercial property owner in Causeway Bay, Hysan Development, is cautious on the Chinese territory’s office market, reported the South China Morning Post (SCMP) on Friday evening (17 February, SGT).
Although Hong Kong’s commercial property market has become more optimistic following the reopening of the city’s borders with mainland China, more new office spaces are expected to enter the market in 2023.
In a report published in January, Colliers revealed that over 4 million sq ft of grade A space were completed in 2022, pushing up Hong Kong’s overall office vacancy level to 14.7 percent – the highest since 2008. This year, the real estate consultancy foresees that an additional 3.2 million sq ft would be added to the market.
“With the uncertainty of the overall world economy, rising interest rates, and the Covid-19 situation, it has brought some pressure on the office [sector],” stated Hysan’s COO Ricky Lui after announcing the landlord’s latest financial results on Friday.
“At the same time, there will be some more new supply in the market, so the office [market] will be facing some challenges this year,” he added.
As for Hysan’s Hysan Chairman Irene Lee, she said it remains to be seen whether office rents in Hong Kong can recover to past levels.
Moreover, Hysan is also cautious on its retail portfolio. Lee noted that despite the higher footfall thanks to the reopening, footfall is not as high as previously. Secondly, consumers may have adjusted their consumption and spending on non-essential items.
“My feeling is that the view can be more certain midyear.”
Last December, Hysan announced that it plans to allocate HK$2 billion to spruce up its HK$90 billion Lee Gardens portfolio in phases by 2026, in a bid to transform it into a one-stop luxury shopping destination.
The Lee Gardens portfolio includes Hysan Place, Lee Garden 1 to 3, 5, and 6 as well as the upcoming commercial development in Caroline Hill Road.
Hysan’s more cautious sentiment comes after the landlord’s underlying profit declined 8.6 percent year-on-year to HK$2.13 billion (US$271.4 million) in 2022.
