Hong Kong Office Space Agents
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Hong Kong Office Market Forecast

December 2019

Market Forecast


We forecast that weak demand will continue


Hong Kong had experienced continual rental growth for over the past 7 quarters, although this was tailing off in recent quarters but this growth came to an abrupt end in Q3. This last quarter was the first time since Q3 2014 (when the Shanghai-Hong Kong Stock Connect was launched) that we have witnessed an overall drop of Grade A rates of around 1.3% growth.


Wan Chai / Causeway Bay saw the largest drop of 1.6% as this district saw the greater competition from decentralized locations and some major relocations to Quarry Bay. The strong activity in Island East meant this was the only location that did not register any decline in rates.


We forecast that weak demand will continue and Grade A rates could soften significantly over the next 12 months, perhaps by as much as 7%. Even though new supply is limited, the cost saving priority of many companies will increase demand for decentralize districts such as Island East, Wong Chuk Hang and Kowloon. That means these districts are likely to have stable rates for the medium term. We expect landlords to become more flexible in offering shorter term leases and widening the tenant mix, in order to attract new tenants and retain existing ones.


Grade A rates could soften over the next 12 months, perhaps by as much as 7%


Quite a number of serviced office / co-working operators are reducing / refining their portfolios with WeWork reportedly looking to offload several of their new locations currently under construction. However, the uncertainties of social conditions and economic climate means the flexibility these facilities offer, will still be an attractive short / medium term solution for many office occupiers.


More companies are looking at repositioning some of their divisions/expansion in alternative cities, with Singapore being the clear favourite but the longer flight times to key cities in mainland China, the limited supply of top Grade A stock (until 2022) and high expat packages, make the overall occupation costs equivalent and becomes a marginal decision.


This last quarter was the first time since Q3 2014 that we have witnessed an overall drop of Grade A rates of around 1.3% growth