News release

Grade A office market records negative net absorption in January

Bid-ask price gap in retail market widening on back of mainland China's reopening

February 21, 2023

Yvonne Liu

Public Relations Director, Hong Kong and Macao
+852 2846 5264

HONG KONG, February 21, 2023 – Hong Kong's Grade A office market recorded a negative take-up of 16,900 sq ft in January as the Chinese New Year is the traditional low season for the office leasing market, according to JLL's latest Hong Kong Property Market Monitor released today.

The market recorded limited leasing activities last month due to the Chinese New Year with the overall vacancy rate edging up to 12.2% as at end-January. The vacancy rate in Central and Wanchai/ Causeway Bay rose marginally to 8.9% and 10.3%, respectively. However, Hong Kong East's vacancy rate retreated to 11%.

Despite the vacancy rate increasing slightly, newly completed buildings remain sought after by tenants. IT solutions company Nexify recently leased one floor with a gross floor area of 12,600 sq ft at the newly completed project The Millennity in Kwun Tong. The firm will relocate and upgrade from COS Centre in the same district.

Alex Barnes, Managing Director at JLL in Hong Kong, said: "We received more leasing inquiries from insurance and financial institutions. Their businesses are expected to benefit from the reopening of mainland China. Hong Kong’s office market will see the transacted improvement in the second half of this year.”

The overall net effective rents dropped by 0.2% m-o-m in January. Among the major office submarkets, rentals in Central and Wanchai/ Causeway Bay both dropped by 0.2%, while Tsimshatsui's rent remained stable.

In the retail market, inbound visitation and total retail sales continued to see a mild recovery in December last year as travel began to resume. The tourism level would likely pick up more visibly in the coming months, with further lifting of entry requirements and border reopening between Hong Kong and mainland China.

However, the leasing activity remained slow in January. Nelson Wong, Executive Director of Research at JLL, said: "Some retailers took a wait-and-see attitude. The bid-ask price gap widened as some landlords increased asking rentals on the expectations of improving market outlook."

Grade A Office Vacancy
Period Overall Central Wanchai / Causeway Bay Hong Kong East Tsimshatsui Kowloon East
End-Jan 23 12.2% 8.9% 10.3% 11.0% 11.0% 19.6%
End-Dec 22 12.1% 8.8% 10.2% 11.1% 11.0% 19.5%

Source: JLL Research 

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