Overall office rents continue to decline in October

HONG KONG, 30 November 2020 – Grade A office rents declined moderately across all major office submarkets in Hong Kong as overall office rents dropped 1.0% m-o-m in October, according to JLL’s latest Property Market Monitor released today.

The magnitude of the rental drop was less significant than in prior quarters, given that the pandemic situation in the city has somewhat been controlled in October. Core office submarkets – namely Central, Wanchai and Causeway Bay, as well as Tsimshatsui – experienced greater rental contractions than decentralised submarkets, such as Hong Kong East and Kowloon East.

Overall negative net absorption reached 308,600 sq ft in October, as some tenants downsized or shut down their Hong Kong offices in the midst of the ongoing economic recession. The vacancy rate in Central edged up to 6.9%, with investment management firm PAG’s office space at AIA Central coming back on the market after the firm relocated to Three Pacific Place in Wanchai.

Alex Barnes, Head of Markets at JLL in Hong Kong, said: “In times of uncertainty, occupiers tend to look for flexibility in their real estate plans; hence, more flexible space operators took space to open new centres. The number of transactions was higher than in previous months, as the third wave of viral infections has faded. The majority of the leasing transactions recorded involved pocket-sized spaces.”

Nelson Wong, Head of Research at JLL in Greater China, said: “Office sales gradually picked up in October as the highest monthly investment volume for this year was recorded. Notably, CIFI and Wang On Properties announced their joint acquisition of 101 King’s Road and 111 King’s Road in Fortress Hill for HKD 1.88 billion, and their intentions to redevelop the area.”