Hong Kong office rents plummet as coronavirus drags commercial property transactions to an all-time low
- The number of deals signed in Hong Kong is likely to fall below 200 this month for the first time since records began in July 1995, according to Centaline Property Agency
- Central’s office vacancy rate reached 4 per cent in January for the first time in more than five years, according to JLL
The volume of transactions for office, retail and industrial properties is poised for a historic low in February, having already sunk to record levels in the previous two months. Meanwhile, a grade-A office building near Central has seen its rent plummet by two thirds to HK$42 (US$5.4) per square foot, the lowest in 10 years.
The number of deals signed in the commercial real estate sector is likely to fall below 200 this month for the first time since records began in July 1995, said Wong Leung-sing, senior associate director of research at Centaline Property Agency.
“The number has been below 300 for a period of five straight months, averaging about 250, and that’s the first time that has happened,” said Wong. “The figure in January [202] has not reflected the impact of the coronavirus outbreak. Transactions are likely to remain low.”
In particular, the number of office transactions in the three months to March may add up to fewer than 150, marking an all-time low, according to Midland IC&I.
“The emergence of the latest coronavirus outbreak has undoubtedly taken a toll on the office market,” said Eric Ong, chief operating officer and director of commercial department at Midland IC&I. “Like during the Sars outbreak, this epidemic will freeze the turnover of offices in the short term.”
Central’s premium office rents dropped the most among Hong Kong’s core business districts as its vacancy rate reached 4 per cent in January for the first time in more than five years, according to JLL.