Office rents in Hong Kong’s Central district to fall by up to 7 per cent as trade war dampens Chinese firms’ expansion plans, says Knight Frank
- Knight Frank’s latest global outlook report forecasts office rents in the city’s main business district to fall by as much as 7 per cent this year
Prime office rents in the Central business district are forecast to decline by as much as 7 per cent this year as mainland Chinese companies pare back their expansion plans amid uncertainties ranging from the US-China trade war to cooling domestic economic growth, according to Knight Frank’s latest global outlook report released on Thursday.
“There are already signs of market softening since November, the first time in 29 months. An uncertain China-US trade relationship and the mainland’s own market challenges have curtailed demands from some mainland firms for prime office space,” said David Ji, director and head of research and consultancy for Greater China at Knight Frank.
Average rents of grade A offices in Central declined by 0.3 per cent to HK$163.7 (US$21) per square foot per month in November from the prior month, reversing a rising trend that has lasted for nearly three years.
Knight Frank forecasts rents will drop 1 to 4 per cent on average across the city. A sharper drop of 4 to 7 per cent is expected for the Central business district. Meanwhile the office vacancy rate will edge up to 2.4 per cent by 2021 from 2.3 per cent in 2018, according to Knight Frank.
Other property consultancies released similarly gloomy outlooks, with Cushman & Wakefield forecasting rents in Central and the nearby areas of Sheung Wan and Admiralty will fall by 4 to 6 per cent this year. Colliers International forecasts grade A office rentals in Central and Admiralty will retreat by 3.8 per cent.
The Chinese economy grew 6.6 per cent in 2018, the slowest growth in nearly three decades, dragged by factors that include Beijing's crackdown on debt and risky spending.