Hong Kong’s office market: Central booms, but noncore areas struggle
Demand in Central and Admiralty is picking up, but vacancies of up to 30 per cent and tight bank lending continue to weigh on noncore areas
The reluctance of banks to finance commercial-property purchases has reinforced the split, allowing cash-rich owner-occupiers to acquire discounted offices in traditional commercial districts while the vacancy rates in some secondary locations remain as high as 30 per cent, according to Centaline Commercial.
Office transactions picked up in the first half of the year, with about 503 deals completed, the highest half-year level since the second half of 2021, the property agency added. Grade A offices led the recovery, with transactions surging 78 per cent year on year to 119 deals.
The recovery has been most visible in top prime offices in the core-business district.
Centaline Commercial said the number of transactions for top-tier offices jumped 78 per cent from a year earlier to 119 in the first half, with lower-priced deals at Lippo Centre in Admiralty and The Centre in Central suggesting that valuations have begun to stabilise after falling roughly 70 per cent from their peaks.
Vacancy rates also improved compared with the same period last year, declining to 4.95 per cent in Admiralty and 10.41 per cent in Central in June.
“The market has found support at current price levels,” said Mark Chan, director of the office department at Centaline Commercial, in a press release published on Tuesday, attributing the demand largely to financial firms, educational institutions and religious organisations buying office space for their own use.