While rents are falling in Central, offices in Tsim Sha Tsui remain in strong demand, with grade A rents up by 8 per cent for the year to date, according to Colliers International. Rents in the district are expected to rise 14 per cent this year.
An average grade A office in the district is now being rented out at over HK$35 per square foot per month, said Colliers, representing a premium of about 40 per cent over office rents in East Kowloon East and over 50 per cent more than rents in West Kowloon.
"In general, market sentiment towards Kowloon is still positive, with demand for grade A office space in core business districts relatively strong. While Kowloon East benefits from the government's redevelopment efforts, TST is the undisputed leader in terms of popularity," said Patrick Mak, Colliers' senior director of office services for Kowloon.
Another property consultant, DTZ, reported a 0.3 per cent rise in office rents in Tsim Sha Tsui over the second quarter. It also said changes in vacancy rates in all districts provided further proof of the rapid absorption of business space in non-core areas.
In the third quarter, East Kowloon's vacancy rate dropped from 4.9 per cent to 3.2 per cent, down by 1.7 percentage points, the biggest drop among all districts. Both Island East and Sheung Wan recorded a drop in vacancy rates of more than 1 percentage point, to 2.8 per cent and 3.6 per cent respectively, DTZ said.
Based on these rates, Island East was now the tightest district for office space, it said. Central and Admiralty saw an increase in vacancy rates to 6.6 per cent in the third quarter, up 0.2 percentage points from the previous quarter.