Landlords rule the roost again as decentralised space dries up

ABOUT 12 months ago, the Hong Kong property market began to turn, with the office rental market starting to show signs of life while the mass residential market reached the end of 15 months of frantic activity.

The outlook for the office market at the beginning of 1992 looked grim, with a record 11 million square feet of new space forecast for completion in 1992 and vacancies of up to 13 per cent in secondary locations.

However, by mid-1992 it was clear that the major buildings, Great Eagle's Citibank Plaza, Sino Land/Sun Hung Kai/ Ryoden's Central Plaza, and Swire's Devon House were filling up quickly, and landlords in Central started to raise their asking rents.

By the end of the year, record take-up of around five million square feet, double the average, had been achieved, and with high take-up continuing in 1993 rents continued to rise.

By mid-1993, this was firmly a landlord's market with Devon House fully let and asking $28 per sq ft for phase two to be completed in 1995, Central Plaza 80 per cent let at monthly rents of up to $54 per sq ft as compared to under $30 in the early phases, and Citibank Plaza also 80 per cent let at similar rents.

The last major project to come on stream in the urban area is Times Square, but, with the first tower being fully leased, the second is now being offered at rents of over $30 per sq ft.