Eason sees no need for office rental controls
THE Government says it has no reason to intervene in the retail office market to restrain prices.
Tony Eason, Secretary for Planning, Environment and Lands, said yesterday the office market was on course for a self-correction and there was no need to act.
After studying a report on the market from an inter-departmental task force, he said there were growing signs of tenant resistance to exorbitant rental reviews over the past few months, and costs had begun to fall.
Grade A office rentals rocketed 106 per cent and prices 165 per cent since October 1991 but the Vigers/Knight-Ridder Index last month recorded its first drop in office rents in two years.
'There is no cause for panic, no need for drastic measures or intervention by the Government, but a need for continual monitoring,' Mr Eason said.
Analysts and developers yesterday said the Government was right to leave the office market to adjust itself.
'The property market is very cyclical,' said S Y Wai, spokesman for the Real Estate Developers' Association.
'There are times when demand and supply don't match as they should, and they take time to self-adjust.' The task force review showed that overall supply was forecast to increase at an annual rate of six to seven per cent between this year and 1996.
In addition, more than 24 million sq ft of office space in industrial-office buildings would become available in the next few years.
Mr Eason said the supply of grade A office space in Central would remain tight in the next two years.
After that the situation would improve, with redevelopment of the Hilton Hotel and new development on the Central and Wan Chai reclamations, which would produce 7.5 million sq ft of quality office space between 1997 and 2001.
Companies facing rental reviews in popular Central buildings such as Exchange Square and Nine Queen's Road Central can expect to pay between $100 and $120 per square foot a month, making Hong Kong one of the most expensive places in the world to locate an office.
Despite this, Mr Eason said there was no solid evidence that foreign companies were leaving Hong Kong for cheaper rentals elsewhere.
'On the contrary, the number of overseas companies registered in Hong Kong has continued to increase whereas the number ceasing operation here has declined in recent years.
'While we should not be complacent, there is at the same time no need for panic measures.'
