70% of new lettings signed in Kowloon’s decentralised areas in February

HONG KONG, 18 March 2019 – Leasing activity was largely focused on decentralised areas in Kowloon, accounting for almost 70% of new lettings in February, according to JLL’s latest Property Market Monitor released today.

Alex Barnes, Head of Markets at JLL, said: “It wasn’t surprising to see leasing demand gravitate towards buildings with availability in and around Kowloon East given the high rents and tight vacancy situation elsewhere in the market.”

The overall market recorded positive net take-up for the first time in four months owing primarily to the realisation of pre-commitments at One Hennessy in Wanchai and NEO in Kwun Tong, two new Grade A office buildings that were issued with occupation permits in February.

The completion of new supply led to a mild increase in the overall vacancy rate. On Hong Kong Island, Wanchai/Causeway Bay recorded the biggest jump in vacancy in February, up from 2.1% to 3.0%, after a co-working operator withdrew from their commitment at One Hennessy; lowering the pre-commitment rate at the new building to 47%.

Denis Ma, Head of Research at JLL, said: “Despite the uptick in overall vacancy, rental rates continued to edge higher across the market, up 0.3% m-o-m in February. Though we expect demand to remain weak over the near term, vacancy remains very tight across the city’s key office markets. Against this backdrop, landlords are likely to continue to incrementally push rents higher over the course of the year.”

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