This is why Hong Kong’s office prices keep rising while property market slides

Dark clouds may be looming over Hong Kong’s property market but thanks to mainland companies, there is one silver lining too – the city’s office market.

In what is predicted to be difficult year for the local real estate market as the United States has begun to raise interest rates, the office market could prove to be an exception as mainland companies seeking locations in prime office districts in the city are expected to keep pushing up prices.

“We expect rents in Central to grow 5-10 per cent in 2016. For the overall Grade-A office market, we forecast rents to climb up to 5 per cent,” said Ben Dickinson, head of markets at property consultancy JLL Hong Kong.

Office rents across all major markets in Hong Kong saw rates rise by a healthy margin in 2015, according to JLL data for the first 11 months of 2015.

A measure ofbroad market office rents was up 8.6 per cent for the 11 months while those in Central rose 12.4 per cent, surpassing HK$100 per sq ft for the first time since the euro-zone crisis in the fourth quarter of 2011, according to JLL.

The average monthly rent of Grade-A offices in Central stood at HK$101.5 per sq ft as of the end of November.