Jan 22, 2014, Hong Kong - CBRE’s Hong Kong Prime Office MarketView for Q4 2013 published today, notes space options shrinking further as vacancy tightens across the board. Key report highlights as below:
Mr. Rhodri James, Executive Director, Office Services, Hong Kong, CBRE, said, “Overall occupier demand is likely to remain weak in the first half of 2014 but activity should increase thereafter as companies gear up for business growth in 2015. Barring any fundamental shift in market sentiment, rents are likely to be stable in 2014. Landlords will continue to focus on tenant retention and their more flexible attitude towards asking rents should provide occupiers with room to negotiate.”
- Overall demand still subdued but some leasing activities did take place.
Despite the subdued overall picture on Hong Kong Island, there were some bright spots in the market with some expansion in the financial services sector and continued steady demand from PRC companies. A number of law firms adopt a wait-and-see approach following the potential resumption in IPO activity.
- Renewals continue to dominate the leasing market.
Most leasing deals are of sub-5,000 sq. ft. space whilst most transactions above this size involved renewals as large space occupiers were reluctant to move given the high cost of relocation and limited space options. This trend has been observed in Central and several other submarkets.
- Vacancy down along with rents.
Overall vacancy for Hong Kong declined slightly due to increase demand and leasing activities in Kowloon by retail and insurance firms. Rents also declined across core areas and also spread to other mid-town and decentralized districts.
- Net absorption improves in core areas.
The quarter saw net absorption increase in core areas of Hong Kong Island but decentralized areas continued to record negative net absorption. Overall net absorption on Hong Kong Island remained negative in the quarter, a trend that was mainly due to movement by AIA following its acquisition of an office building for self-use. Over to Kowloon, however, net take up reached 142,180 sq. ft. marking the first quarter of positive net absorption recorded since Q2 2012.
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Neither CBRE nor its affiliated companies make any warranties or claims on the implied accuracy of the information contained herein.
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