office rental

Office Rental In Hong Kong May Be At Its Worst Possible Decline – Us Investment Bank Morgan Stanley


HONG KONG – The global recession and COVID-19-spurred work-from-home policy having its toll on office rentals and Asian economic powerhouses

Office Rental in Hong Kong may have just hit its worst possible fall, US investment Bank ‘Morgan Stanley’ predicts. In their July reports, statements expressing concerns over the Asian stock market and office rentals were made regarding the current global need for office workers to work from their various homes.

In the initial half of the year, office owners were left to suffer a 13 percent fall in the price of office rentals. This development amounted to a stock price slide, making it far cheaper than its original market value.

The US investment Bank reports that business firms and establishments are experiencing ominous signs. Top landlords and other asset owners are somewhat caught off guard by recent negative vibes from skeptical investors from whom their businesses flourished in the recent past.

Amid dwindling economies and perhaps bleak prospects in Asia, Morgan Stanley also reports that property owners like Sung Hung Kai Properties, Swire Properties, and Hong Kong Land manage around US$345 billion worth of office space. These premium office spaces sum up to 42 percent of the price in half of a dozen economic strongholds in the continent.

The US Bank said, “Hong Kong Land and Swire Properties have factored in as much as a 40 percent decline in rental from the current level, which is unlikely, in our view. Sun Hung Kai Properties’ valuation is one of the cheapest the stock has shown historically.”

According to Morgan Stanley’s reports of 689 office workers from 20th to 23rd July, the use of office spaces may fall only by 3 percent over the next three years, but rent prices may fall by 7 percent. It has also forecasted worse slides in other parts of Asia and Australia.

The managing director at Colliers International (Hong Kong), Nigel Smith, claimed that a copious number of office tenants have been demanding for their office spaces’ concession.

He said: “We have seen an increase in tenants looking to surrender all or part of their premises. This is more off the back of the global recession, rather than changing work habits or work-from-home.”

Morgan Stanley predicts that by 2022, nearly 10 percent of office tenants in Asian economic powerhouses would not need rented office spaces anymore due to the work-from-home development and its alleged accompanying convenience.

As Asian governments, companies, entrepreneurs, etc. experience fresher hits of Covid-19 and post-COVID-19 impacts, it is expected that the need for office spaces decreases.


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