Office rentals stuck in downward spiral

A rebound in the office leasing and sales markets is not expected until the end of next year, according to Chesterton Petty.

The property consultant said investors would continue to be cautious and office rentals would remain under downward pressure with increasing vacancies.

A further drop of 1 per cent to 10 per cent in rentals, especially in core business areas such as Central and Wan Chai, was expected.

The war in Afghanistan and the dampened global economic and political environment would constrain new demand for office space. Leasing activity primarily would comprise relocations and renewals in the near future, it said.

Office surrenders continued last month, primarily from dotcom companies, it said.

Grade-A office rentals on Hong Kong Island fell an average 3 per cent last month, with up to nine months' rent-free periods being offered.