Hysan Development, the biggest commercial landlord in Causeway Bay, expects the office rental market to remain under pressure as rates have fallen more than 50 per cent in the past three years.
Managing director Michael Lee Tze-hau said office rental rates, which accounted for 45 per cent of the group's turnover, only returned to the pre-Sars level when new leases came up for renewal - normally after three years.
He said rates on office leases signed in the first half were 15 to 20 per cent higher than those signed late last year, and the occupancy rate of its office portfolio was 97 per cent.
'Despite the office market being on the recovery path, rents have fallen more than 50 per cent for the past three years and it will take time to pick up,' he said.
Hysan said gross rental income fell 5.7 per cent to $559.8 million for the first six months, mainly due to a 23 per cent drop in office rental income.
Retail rental accounted for 38 per cent of total income and the rest came from residential rental.
The developer owns the AIA Plaza and the Hennessy Centre, as well as Lee Gardens One and Two in Causeway Bay.