Hong Kong Office Rents Plunge Nearly 20% Amid Covid-19
Liao Shumin
DATE:  Dec 16 2020
/ SOURCE:  Yicai
Hong Kong Office Rents Plunge Nearly 20% Amid Covid-19 Hong Kong Office Rents Plunge Nearly 20% Amid Covid-19

(Yicai Global) Dec. 16 -- The cost to rent Grade A office space in Hong Kong has fallen by an average of 18.7 percent in the first 11 months as the Covid-19 pandemic takes its toll on the economy and encourages people to work from home, the 21st Century Business Herald reported today.

Rents in Hong Kong's Central District, which once had some of the most expensive leases in the world, are down an average of 21.3 percent, the report said.

Rents in first-tier office blocks have been under pressure since 2018 and have fallen for seven consecutive quarters, it said. It now costs around HKD102 (USD13) per square foot, a return to 2015 levels.

Rents are likely to fall by a further 16 percent next year, said John Siu, managing director of US commercial real estate services firm Cushman & Wakefield’s Hong Kong branch. Another nine new office buildings should be completed by 2022, adding 4.2 million more square feet of rental space to the market, so rents will be under increasing pressure, he added.

Vacancy rates are also climbing, said Eric Ong, chief operating officer of the industrial, commercial and shops division at property agency Midland IC&I. Around 8.1 percent of Grade-A office blocks in Hong Kong’s Central, Western and Admiralty districts now stand empty, a new high since the financial crisis of 2008, he added.

Non-occupancy rates are likely to rise to 14 percent next year, Siu said. It is a stark turnaround from nine years of growing occupancy. The vacancy rates was a low 4.2 percent in August 2018, down from 11.9 percent at the start of 1999.

Trading in Hong Kong’s commercial property market has also become more subdued. Only 60 trades valued at more than HKD100 million (USD12.9 million) have taken place so far this year, far fewer than last year’s 89 and an 80 percent slump from 2018, according to Chicago-based Cushman & Wakefield data.

Hong Kong’s fifth tallest skyscraper owned by tycoon Li Ka-shing sold for a record HKD40.2 billion (USD5.2 billion) in November 2017, indicating how valuable commercial property in the special administrative region once was.

Editor: Kim Taylor

Follow Yicai Global on
Keywords:   Hong Kong,Rent