The View | Why Hong Kong’s property market will benefit from falling office rent in pricey Central
- While the economic downturn that has led to a decline in both rent and leasing activity in the world’s most expensive office market is worrying, a narrower rental gap between Central and other districts would set up the market for a healthier, more stable recovery
In the first quarter of this year, rents for Grade A office space in Central plunged 9.2 per cent quarter on quarter, according to data from JLL. Among the 27 office markets in the Asia-Pacific region tracked by the adviser, only Beijing, other than Hong Kong, suffered a decline of more than 2 per cent, while several cities in Australia and Japan even enjoyed sizeable increases despite the Covid-19 pandemic.
Last quarter, the net absorption of office space was negative for the second straight quarter, the first back-to-back declines in net take-up since the 2008 financial crisis, according to data from CBRE.
In Central, which has borne the brunt of the collapse in leasing activity due to its sky-high rents and the sharp fall in demand from mainland firms, the net withdrawal of space last month reached its highest level in over a year, accounting for nearly 60 per cent of the overall drop in net take-up, data from JLL shows.
In a sign of the severity of the contraction in demand, a growing number of high-profile tenants are surrendering their leases. Earlier this month, Mingtiandi, the Asian property news website, reported that online travel agency Expedia was giving up its 25,000 square feet office in The Center.