Increasing supply in Kowloon East has started to add pressure to office rents in Tsim Sha Tsui, where vacancy rates increased by 0.6 percentage points quarter on quarter to 3.8 per cent in the third quarter, according to property consultant DTZ.
This indicated that part of the demand had shifted to other districts such as Kowloon East, DTZ said.
'As the tenant profile of Tsim Sha Tsui is similar to that of Kowloon East, where more grade-A office space especially large floor plates are available, tenants are prompted to move [there for expansion],' said Alva To, DTZ head of consultancy for North Asia.
New completions between this year and 2010 would exceed 14 million square feet, a majority of which would be in Kowloon East (over seven million sq ft), followed by Island East and West Kowloon (each over two million sq ft), said the property consultant.
The decline in take-up was more prominent in Tsim Sha Tsui, which saw negative take-up of 52,460 sq ft in the third quarter. As a result, the district's average net effective rents remained stable at HK$31 per square foot, while rents in Central rose 9 per cent in the third quarter to HK$100 per square foot, according to DTZ.
Average rentals in Sheung Wan and Wan Chai/Causeway Bay saw mild growth of 2 per cent and 4 per cent, respectively, to HK$44 per square foot and HK$41 per square foot, mainly boosted by spillover demand from Central. Marginal increase was noted in Island East rents, from HK$27 per square foot in the second quarter to HK$28 per square foot in the third quarter.
