Exodus from Hong Kong’s prime office districts will continue as protests put economy under more stress
- Prime rents in Central fell in the second quarter of 2019, the first drop since 2014, as more businesses leave for Kowloon East and Hong Kong East
- In time, however, continuing unrest will undermine confidence in Hong Kong as a financial hub, and the market as a whole will suffer
Hong Kong’s office market was cooling rapidly long before the mass anti-government protests erupted in early June.
While prime rents in Central were still rising in the first quarter of this year on a quarter-on-quarter basis, they began to fall in the second quarter, the first drop since the second quarter of 2014, according to data published by CBRE, a property adviser.
JLL, another real estate consultancy, which publishes data on a monthly basis, notes that rents in Central continued to fall throughout the summer, pressured by a decline in net take-up, which has pushed up the district’s vacancy rate to a three-year high of 2.8 per cent.
Indeed, leasing demand in the city’s office market is now being driven by tenants relocating from Central and other core submarkets to decentralised districts where occupancy costs are considerably cheaper.