After a stagnant start to the year, sentiment in the Hong Kong office sector has improved and momentum in the leasing market in the central business district is picking up.
'The rebound in activity is stronger than we expected,' said Simon Lo Wing-fai, executive director of research and advisory in Asia of Colliers International.
Lo said demand for Central offices may have reached a positive turning point. 'The market seems to be coming in for support after rentals declined 10 per cent since the beginning of the year,' said Lo.
Colliers expected rentals in Central to drop 20 per cent this year but their outlook changed after better than expected demand for office space from non-finance-related sectors. Lo said some mid-sized multinational companies took advantage of a decline in rentals to move to the core office district.
'There is evidence to suggest that some occupiers have switched their focus from obtaining lower rents to securing quality space,' said Edward Farrelly, Head of Research for Hong Kong, Macau and Taiwan for CBRE.
Despite uncertainty over the European debt crisis and a lack of supply, take-up of space in Central/Admiralty was positive in the second quarter, at 5,707 square feet, compared with a drop 291,194 square feet between January and March, according to DTZ.