Hong Kong’s office glut to come under further pressure from Credit Suisse-UBS merger, analysts say

With thousands of jobs at risk from Credit Suisse-UBS tie-up and more on the line across the wider financial sector, the outlook for Hong Kong’s office sector looks bleak

The vacancy rate at Hong Kong’s grade A offices continued to inch higher last month, rising 0.1 per cent month on month, while rents dropped 0.2 per cent

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Credit Suisse is one of the largest tenants at International Commerce Centre, West Kowloon. Photo: Elson Li

Published: 10:00am, 26 Mar 2023Updated: 10:43am, 26 Mar 2023

The fallout from the UBS-Credit Suisse merger and more job cuts in the finance industry are likely to further squeeze Hong Kong’s premium office market, which is already suffering from a glut of vacant space.

Demand for offices continues to weaken and the market has not yet seen any signs of a rebound even after the reopening of the border with mainland China, analysts said.

“Companies in general have turned more cautious, while some occupiers have been downsizing for cost-saving [and] consolidation,” said John Siu, managing director of Cushman & Wakefield Hong Kong.

Big banks such as JPMorgan Chase, Bank of America and Citigroup have reportedly reduced staff in Asia including Hong Kong. And UBS’s US$3.2 billion rescue of smaller Swiss banking rival Credit Suisse – that could put thousands of jobs at risk – could deal another blow to office landlords in the city.

Signage for Credit Suisse Group outside a building in Hong Kong. Photo: Bloomberg

The office vacancy rate in Hong Kong rose 0.1 per cent month on month to 12.3 per cent in February, despite a positive net absorption, according to a report from JLL on Tuesday. The vacancy rate of grade A offices in the city stood at 12.1 per cent at the end of last year as more supply came onstream in non-core areas, JLL said.