Oversupply to pare office rents
Grade-A office rents and capital values will continue to drop for the next year or so due to the oversupply situation, according to Swire Properties director Michael Moir.
Speaking at a property forum yesterday, Mr Moir said: 'My view is that rents and capital values will fall a bit further and continue into next year across the board because the supply hasn't actually come on stream yet.' According to projections, up to 6.7 million net square feet is expected to come to the market this year followed by a further 3.77 million net square feet next year.
Mr Moir said the oversupply situation would be shortlived as the office market would correct in due course.
'I don't think we should be frightened by the figures,' he said.
Mr Moir said Hong Kong was not like some cities in the United States which had built a 10-year supply of office space all at once.
'The supply and demand situation has been kept in reasonable shape,' he said.
Current yields in the grade-A office market of about 3 per cent were unsustainable and should increase to about 6 per cent or 7 per cent, he said.
Mr Moir said office rents in Central would weaken next year when much of the new supply in the business district came on to the market.