Chinese companies from second-tier cities will drive tenancy demand in Hong Kong’s Central district
Kowloon East can offer a cheaper alternative where office supply is increasing.
Mainland Chinese firms, particularly those from second-tier cities, will become a key source of demand for office space in Hong Kong’s Central district in the short term as they follow their counterparts from first-tier cities, according to property consultants CBRE.
Still, landlords looking to manage their risk may continue to seek premium rents and longer deposits, such as they would demand from more established tenants, CBRE said.
CBRE Hong Kong Executive Director of Office Services Rhodri James said the uncertain economy and the increasingly challenging global banking environment have raised questions over the sustainability of office demand.
“We have already noticed more surrender cases, particularly in Central,” James said. “However, so far these spaces have been well absorbed due to limited vacancy and the fact that they are already fitted-out, making them attractive for replacement tenants.”
Despite the weaker demand from occupiers, CBRE Research expects tight vacancy to continue to support further rental growth in the second half of the year.
CBRE said rents in Central may grow by 10 per cent in 2016. During the first quarter, rents in the district increased by 5.2 per cent.
These spaces have been well absorbed due to limited vacancy and the fact that they are already fitted-out, making them attractive for replacement tenants