Offices may decamp to Hong Kong’s Causeway Bay amid rental crash in the world’s costliest retail strip

The monthly net office rent in Causeway Bay averaged HK$60.4 (US$7.74) per square foot, about half the charge in Central, according to Knight Frank

Central’s October rent rose 0.5 per cent from a month earlier, while Causeway Bay was unchanged

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Aerial view of The Excelsior Hotel (centre) in Causeway Bay, which was closed for redevelopment into a commercial office tower, on 9 October 2018. Photo: Roy Issa.

Published: 8:30am, 8 Dec 2021

Causeway Bay looks increasingly more appealing as an office address, amid the rental crash in what was until recently the world’s most expensive retail shopping district.

The monthly net office rent in the district between Hong Kong’s Wan Chai and Quarry Bay averaged HK$60.4 (US$7.74) per square foot, just about half the HK$113.6 per square foot in the city’s Central financial hub, according to Knight Frank. Central’s October rent rose 0.5 per cent from a month earlier, while Causeway Bay was unchanged.

“Causeway Bay’s rent is between Central and Quarry Bay,” said Knight Frank’s Greater China head of research Martin Wong. “Compared with Wan Chai, office buildings in Causeway Bay are newer and of higher quality, which are also reflected in the discrepancy in rents and vacancies.”

The district, particularly the Russell Street thoroughfare, commanded the world’s most expensive retail rents for six consecutive years until 2020, boasting flagships by such luxury designers as Burberry, La Perla and Prada. The Italian designer Prada left Russell Street last year after months of street protests and Covid-19 pandemic, a departure that forced the landlord to slash rents by 44 per cent to fill the vacancy, kicking start a domino effect that weighed on rental charges throughout the district.

An undated aerial image of Hong Kong Island from Victoria Harbour, showing Victoria Park (left), Causeway Bay (centre), Wan Chai to the right and Admiralty (right). Photo: Handout by Hong Kong Government.

One investor betting on Causeway Bay’s potential as a prime office zone is H Development Holdings Limited, which counts the 28-storey retail commercial complex Henry House and the 24-floor Biz Aura office building in its property portfolio. H Development recently completed the redevelopment of a commercial building in Causeway Bay, the 25-storey HDH Centre on Irving Street.

“HDH Centre is our flagship for 2021, a Grade A commercial complex located at the heart of Causeway Bay and primed to become a landmark in the community,” said Eric Ng, H Development’s chairman. “The group is optimistic about the market and potential of Causeway Bay.”