Limited new supply and strong demand from the financial sector spurred Knight Frank Research to revise up its grade-A office rental growth forecast from 15 to 25 per cent this year.
The agent bumped up its forecast after grade-A office rentals increased last month at the fastest monthly pace since April 2008.
It said the average rent for grade-A offices increased 3.9 per cent last month after 0.3 per cent growth in July. In Central, office rents led the market higher, with a rise of 7.7 per cent. Causeway Bay rents rose 6.3 per cent and the average price in Kowloon East was up 5.9 per cent.
'Considering the stronger-than-expected leasing demand, we have revised our forecast for office rental growth from 15 per cent to 25 per cent this year,' Xavier Wong, director and head of research for Greater China at Knight Frank, said.
Rents are expected to rise next year at the marginally less rapid rate of 20 per cent, Wong said, with the completion of a number of office projects in Central. Those redevelopments include the Dragon Seed Building, Luk Hoi Tung Building and Crocodile House redevelopments. Average grade-A office rents were expected to surpass the previous peak of May 2008 by mid-2012, he said.
A number of financial institutions and professional services companies are scrambling for limited space in key areas. The average vacancy rate on Hong Kong Island fell to 3.1 per cent last month, from 3.5 per cent three months earlier.