Hong Kong Office Space Agents
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Hong Kong Office Market Forecast

November 2018

Demand


Generally, demand has been strong but high rental rates have stifled growth.


Many companies have decided to make do with what they have, involving a re-configuration of their current space to accommodate additional staff but others have decided that was not possible, so moved to more cost-effective locations that still offer high quality space but in less fashionable locations.




Supply


The lack of new supply has been a significant factor in driving up rents for some while and is a serious concern for all businesses planning for further growth and possibly impeding expansion.


In 1999 the general vacancy rate for Grade A stock was 11.9% and by 2018 it is down 4.2%. However, the situation is even worse in the four core market locations (Central, Wan Chai, Hong Kong East and Tsim Sha Tsui) where the vacancy rate is now down to a meager 1.6%.


We foresee rates firming by a further 9% for the following 18 months.




Rentals & Forecast


We expect the annual take up to increase to around 2 million sq ft on average from 2018 to 2022, which is an increase of 130% from the previous 5 years.


We anticipate rental rates will have advanced by around 8% for the whole of 2018 and despite an increase in supply next year and in 2021 we foresee rates firming by a further 9% for the following 18 months.