Hong Kong Office Leasing

Housing Investment Consultancy
Office Leasing

January 2019

Rents continue to test affordability in most districts as tenants search for a dwindling number of decentralised alternatives.

Wanchai/Causeway Bay rents increased by 2.6% in Q4/2018, making this the business district with the highest rental growth for a third consecutive quarter.

Causeway Bay and Island East have now emerged as two new financial hubs. Causeway Bay is popular among Asian banks while Island East tends to attract the middle and back offices of multinational financial-institutions.

Kowloon East, where average rents are HK$35.5 per sq ft net effective, remained the only district where rents were not at an historical high in Q4/2018. Despite this, rents have held up remarkably well considering the high supply volumes in 2018.

WeWork took over 90,000 sq ft in Hysan’s portfolio in Causeway Bay in Q4, continuing the active expansion of their co-working operations in Hong Kong.

PRC demand has slowed given HNA’s surrender of five floors in Three Exchange Square while some PRC firms reportedly walked away from leases in ICC.

The overall vacancy rate in Hong Kong increased by around 0.5 percentage points during the quarter with a majority of the space located in Kowloon East.

We expect Grade A rents to continue to make modest gains next year but a protracted trade war and/or a sustained stock market sell off could reverse that.