Office rents in Hong Kong’s Central district may drop for first time since 2013, says Colliers

Hong Kong’s Central district, the world’s most expensive office address, will see rents fall next year for the first time since 2013, according to Colliers International.

The tanking stock market, rising interest rates and the US-China trade war are all taking a toll on the confidence of financial firms, which make up the bulk of Central’s tenants, said the property services company.

That may lead to a 4 per cent fall in the area’s office rents in 2019, Colliers forecast.

“Rising interest rates may be negative for investment banks, since they would tend to reduce risk appetite, which in turn tends to depress equity and bond markets and trading volumes … this should feed through to a modest correction in rents,” said Andrew Haskins, Colliers’ Asia head of research.

Central, the core business district, has been crowned the world’s most expensive place for renting office space for three straight years. It commands annual rent of US$307 per square foot, almost a third higher than the US$235 per square foot in London’s West End, data from CBRE shows.

Hong Kong has the closest correlation between stock index performance and office rent levels of any city in Asia, according to Colliers. The Heng Seng Index has dipped more than 20 per cent this year, giving the commercial agent cause to believe rents are on the turn.