Grade A office rents growth slowsBusiness | 9 Jul 2019 4:56 pm
Real estate advisor Savills aid that despite the positive rental growth at 0.8 percent of Grade A offices for seven consecutive quarters in all districts, the rate of growth was below the 1.6 percent rise in the previous three months.
Simon Smith, senior director of research and consultancy at Savills said: "The average Grade A office rent in Central is now at an 80 percent premium over Chiyoda Ward in Tokyo and accommodation costs are beginning to erode the city’s competitiveness compared with its nearest rivals Singapore, Tokyo and Shanghai. New demand drivers are emerging as limited supply on Hong Kong island suggests continuing support for rents, even if room for strong growth is limited.”
Central rents increased by 0.9 percent in the second quarter, down from 2.9 percent in the first quarter.
Rents in Wan Chai/Causeway Bay, Island East, and Tsim Sha Tsui also grew more slowly.
The situation was different on the other side of the harbor as rents in Kowloon East and Kowloon West increased by 1 percent and 1.3 percent quarter on quarter respectively, higher than the 0.5 percent and 1.2 percent growth in the first quarter.
The overall office occupancy rate fell to 96.9 percent from 97.4 percent in the first quarter.
The vacancy rate on Hong Kong Island was 2.3 percent at the end of June, up from 1.8 percent at the end of March, while the vacancy rate in Kowloon stood at 4.1 percent.
Availability of high-quality office in core areas will remain tight, JLL said, as only four major office projects will be completed on Hong Kong island between 2019 and 2022 and they are all located outside Central.