Overall HK Office Rents Dip 0.2% In May: JLL

HONG KONG – Overall net effective Grade A office rents in the Chinese territory slid by 0.2 percent month-on-month to HK$57.3 psf per month in May 2022, after it remained unchanged in April at HK$57.4 psf, according to the latest Hong Kong Property Market Monitor published by Jones Lang LaSalle (JLL) earlier this week.

“Among the major office submarkets, Central’s rents remained flat, while Hong Kong East experienced the biggest rental decline,” stated the real estate consultancy in its report.

Nonetheless, the overall vacancy rate in Hong Kong’s office market dipped to 9.3 percent in May compared to 9.4 percent seen during the preceding month. However, the vacancy level in Central edged up from 7.4 percent to 7.6 percent over the same period, while Hong Kong East recorded the highest increase of 0.4 percentage points.

“Kowloon East continued to register the highest vacancy rate among major office submarkets at 12.6 percent,” noted JLL.

Still, the real estate consultancy said that the positive momentum of Hong Kong’s office leasing market continued in May, with overall net office absorption hitting 129,000 sq ft.

“The flight to quality trend prevailed as tenants actively looked to upgrade office space. One recent example is that China CITIC Bank International has confirmed to pre-lease six floors (approx. 150,000 sq ft, LFA) at Two Taikoo Place in Quarry Bay. The bank will relocate from within
Taikoo Place,” added Jones Lang LaSalle.

Moreover, there were several notable office rental deals in Hong Kong during the period under review. For instance, a 26,000 sq ft high-zone office space at Hang Seng Tower, Telford Plaza was leased in the low HK$20s psf. A 10,000 sq ft mid-zone office space at Genesis was also taken up at the same rate.

Meanwhile, a high-zone office floor at Novo Jaffe was divested for HK$49.4 million (HKD 22,000 psf) to a New World-related entity in May 2022. Notably, Novo Jaffe is an office building being developed by Rykadan Capital.