Hong Kong office rents have increased by 12 to 16 per cent since the beginning of the year, keeping long-term institutional investors bullish on the local office sector, according to a new report. The Knowledge, Colliers Jardine's overview of the Hong Kong property market, reported that investors were undaunted by successive interest rate hikes, and were generally optimistic about the office market, citing the resurgence of en-bloc sales at such properties as 981 King's Road and the low block of the Grand Millennium Plaza. The report said the key word was 'longer term'. Property buyers were committing to long-term strategic investment, contrasting sharply with the last property cycle where speculators were simply looking for quick returns over an unusually short time frame. In the first half of the year, prime office developments in core locations have been the best performers, with some properties posting growth of more than 16 per cent, thanks mainly to the rebound of the local economy and the boom in the technology sector. At the end of May, the average grade-A rent in Central was $40.43 per square foot per month. With supply forecast to tighten in the next 18 to 24 months, Colliers Jardine said the average vacancy in the grade A sector is expected to come down further to about 11 per cent this year. 'We believe that the market is capable of achieving more than 30 per cent year-on-year growth in rentals this year, and 22 per cent on a 12-month rolling basis,' the report said. With the economic recovery, the emerging technology sector has contributed significantly to the increase in office space usage during past quarters. The demand for office space attributed to the sector had been growing at a faster-than-expected pace since the fourth quarter of last year. The best example was the sharp boost in occupancy at Oxford House, a new grade A office building built by the Swire group in Quarry Bay. The building has gone from being less than 50 per cent occupied to nearly full occupancy in the two months after Cable and Wireless HKT and Time Warner signed lease agreements. The report said that although there had been near-term consolidation of equity prices for some technology companies, the potential growth of the sector should remain one of the office market's main pillars.