Office Tenants May Relocate To Causeway Bay Amid Rental Drop
HONG KONG – Some office occupants in the Chinese territory may gravitate towards Causeway Bay, where office rents are about half of that in Hong Kong’s Central, reported the South China Morning Post (SCMP) on Wednesday afternoon (8 December, SGT).
According to data from property consultancy Knight Frank monthly net office rent in Causeway Bay averaged HK$60.4 (US$7.74) psf, or roughly half of Central’s HK$113.6 psf. Central’s office rent also edged up by 0.5 percent in October compared to the prior month, while that in Causeway Bay was unchanged.
“Causeway Bay’s rent is between Central and Quarry Bay,” said Knight Frank’s Greater China head of research Martin Wong. Causeway Bay is sandwiched between Wan Chai and Quarry Bay.
“Compared with Wan Chai, office buildings in Causeway Bay are newer and of higher quality, which are also reflected in the discrepancy in rents and vacancies.”
One investor bullish on Causeway Bay’s potential as a prime office area is H Development Holdings, which owns the 24-storey Biz Aura office building and Henry House, a 28-level retail commercial complex. Recently, the company completed the redevelopment of the 25-storey HDH Centre along Irving Street.
“HDH Centre is our flagship for 2021, a Grade A commercial complex located at the heart of Causeway Bay and primed to become a landmark in the community,” said H Development’s Chairman Eric Ng, who added that they are upbeat on Causeway Bay’s potential.
Similarly, coworking space operator IWG has taken over the former premises of rival WeWork in Tower 535 on Jaffe Road in Causeway Bay.
On Causeway Bay’s waterfront, the Mandarin Oriental Hotel Group closed The Excelsior hotel in 2019 to redevelop it into a 26-storey office tower. The redevelopment, which cost US$650 million, is expected to be ready by 2025.
As several firms have recently expanded their office presence or moved back to Central, office rents in Central are likely to increase faster. In turn, this would increase the attractiveness of Causeway Bay as a good option for corporate offices.
“Given its status, the quality of (Central’s) buildings and other attractions, the office rental market in Central is expected to recover and rise much faster, while rents in Causeway Bay are likely to take time to fully recover,” added Wong.
