China border reopening to boost demand for Hong Kong office space, but rents won’t rise significantly, analysts say
- CBRE expects vacancy levels to go up from 14.6 per cent currently to closer to 16 per cent by the end of 2023, because of a ‘supply boom’
- Pace of economic recovery and overhang of new office spaces from last year are likely to temper any expansion afforded by mainland Chinese firms, Savills says
They have given a wide range of forecasts for office rents, from an increase of as much as 3 per cent to a decline of as much as 10 per cent this year.
“We will continue to see a supply boom coming into the market,” he said. “So, we do expect the vacancy level will continue to go up from, like I said, 14.6 per cent currently. We forecast that by the end of 2023, the market vacancy level will be getting closer to 16 per cent, if all new supply or the pipeline is completed in the next 12 months.”
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First travellers arrive and depart from Beijing as China reopens international borders
Rents are likely to decline by as much as 5 per cent. “We are seeing a potential demand recovery, particularly from Chinese firms that will support leasing activity for 2023, thanks to the border reopening, while [multinational companies] will continue to stay cost-cautious on expansion plans due to global economic headwinds and high financing costs,” said Ada Fung, executive director, head of advisory and transaction services – office services, CBRE Hong Kong. “However, cost control and escalating vacancy pressures will continue to weigh on rents until demand is strong enough to reverse this trend.”
The pace of recovery and overhang of new office spaces from last year are likely to temper any expansion afforded by mainland Chinese firms, said Savills, which forecast a further slump of as much as 10 per cent in office rents this year.