Hong Kong’s office market will bottom out in the second half this year as economic activity picks up, Colliers says
- Office rents and prices might edge up in 2022 by 3 per cent and 4 per cent, respectively
- Short commutes, small homes mean it is not always practical to work from home, and some clients told Colliers that they actually prefer to work in offices, firm’s head of research says
Colliers International has become the first property consultancy to sign post a recovery in Hong Kong’s office market.
The Toronto, Canada headquartered company said the market could bottom out by the middle of this year, with prices rebounding by about 25 per cent between next year and 2025 to pre Covid-19 levels despite the rising trend of work from home, decline in co-working operators’ footprints and corporate downsizing amid the pandemic, and a record recession in Hong Kong’s economy.
If vaccines contain Covid-19 in the first half of this year, this could lead to a gradual pickup in economic activity in the second half from a record recession. As a result, office rents and prices might edge up in 2022 by 3 per cent and 4 per cent year-on-year, respectively. Office prices might extend the rebound by around 25 per cent between 2022 and 2025, the consultancy said.
But before any rebound, grade A strata-title office prices will face a 10 per cent correction this year, with rents dropping by another 7 per cent, Colliers said.
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The city’s office market has seen dramatic changes in economic cycles over the years. Hong Kong’s average price of grade A offices dropped by 34 per cent between 2000 and 2003 to HK$3,660 (US$462) per square foot, Colliers said. Since then, office prices have rebounded, rising six times to HK$25,770 per square foot until the most recent peak, in 2018, despite a drop following the global financial crisis in 2009.