A 56 per cent decline in office rentals in Central and Admiralty during the property downturn has largely been offset by the recent rebound of almost 60 per cent, according to Chesterton Petty. This was especially obvious when deflation was also taken into consideration, the property consultant said. According to Chesterton, the market has been turning around, with Central and Admiralty leading the recovery among major business districts. The area's sales prices had also stabilised since Central and Admiralty remained investors' primary focus for commercial properties, it said. Despite registering a 30 per cent rental increase in Wan Chai and Causeway Bay recently, the market in those areas had recouped only 24 per cent of the rental decline. The area's office prices continue to fall due to reduced activity among office buildings that were previously targets for speculation, such as Convention Plaza. The office rental market in North Point and Quarry Bay has been adversely affected by a substantial new supply. The recent boom in the high technology industry has helped boost office rentals in the area, which is favoured by technology firms. Meanwhile, Chesterton Petty said prices of Sheung Wan offices had not shown much improvement since they were considered to be second-tier and thus not the main focus of investors. The pace of recovery in the Tsim Sha Tsui office market is relatively slow. The market is dominated by trading firms and smaller professional companies, with the majority of sales driven by owner-occupiers. This accounts for the less volatile nature of both rental and sales activity. Vacancy rates have declined across the board. The overall vacancy rate in Central and Admiralty has fallen from the peak of more than 15 per cent to a recent low of less than 5 per cent. Vacancy rate in peripheral areas has decreased from more than 18 per cent to just below 10 per cent. Chesterton Petty also said the recovery of the retail property market was slowing, taking shape with the local economy improving and consumer confidence rising. The possibility of an additional interest rate rise was not expected to depress retail spending seriously and the retail property sales market would continue to stabilise with prices firming. Retail activity was expected to be boosted by the approaching summer shopping season and thus leasing activity would stay buoyant this month, it said. It expected rentals for small-sized street shops to rise and those of large-sized shops to remain stable. The consultant estimated retail rentals went up slightly last month from April. Present rentals for prime street-front shops were HK$200 to HK$450 per square foot a month. Those in secondary locations ranged from HK$150 to HK$200 per sq ft. On the industrial market, the information technology, trading sectors and others requiring modern facilities have been relocating from low-end commercial properties to prime industrial buildings.