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Central office rent stays at top again

Business | Joyce Chen Dec 7, 2017
Office rents in the greater Central district are the highest in the world for the second year. They rose 7.5 percent this year, driven by robust demand from Chinese institutions and limited availability, says Cushman & Wakefield.

Rents of grade A offices in Central hit HK$143.6 per square foot a month in the fourth quarter, a 2.7 percent quarterly growth and 7 percent year-on-year increase. China companies have taken 54 percent of this year's contracted rentable area while bank and financial companies were the main reason for the records, managing director John Siu said.

Supported by these companies, office rents in Central could gain 7-9 percent next year, while 3-5 percent growth will occur in Wan Chai, Causeway Bay and Island East, Siu expects.

However, rents in Kowloon East are likely to fall by 4-5 percent, with 11.5 percent rent availability.

There will be eight million square feet of office supply, which will push up the region's overall office rent availability in the next five years, while only 600,000 million sq ft of new office buildings will come to the Central area in 2002.

For retail leasing, rents will be stable from the first half of next year. They might climb by 2 percent in Causeway Bay and Tsim Sha Tsui if retail sales are positive, said the consultancy executive director and head of retail services Kevin Lam.

As the number of visitors bounced back this year, decreases in retail rents have narrowed. Causeway Bay has fallen only 3.3 percent this year and Tsim Sha Tsui 3.4 percent.

Meanwhile, PricewaterhouseCoopers said excess global capital inflow to Hong Kong pushed up property prices. Mainland and foreign firms have invested in office projects in Kowloon east recently. This is expected to continue.

Its tax partner, KK So, believes that Hong Kong real estate is still attractive for investment as it offers great returns in comparison with other cities.

He added that the property price trend is closely related to rate increases, and warned investors to be cautious.

Meanwhile, units of a project in Kau To Shan developed by Sun Hung Kai Properties (0016) will be put on the market by tender in 10 days.

The project offers units and houses ranging from 924 sq ft to 3,777 sq ft. Model units will be available soon.

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October 2018