Hong Kong Grade A office rents see lowest drop in three quarters

Rents only fell by 2% in Q1 2021.

Despite the overall negative net absorption of office space recorded at -459,400 sq. ft. NFA as of Q1 2021, office leasing sentiment has slightly picked up. According to Colliers, the overall Grade A office rents dropped by 2.0% QOQ in Q1 2021, the lowest drop over the past three quarters which demonstrated the pace of rental correction moderated. There have been more enquiries and inspections witnessed across different submarkets, particularly around the CBD area.

“The implementation of the vaccination programme globally should help control the pandemic. Therefore, we expect demand for office space to further pick up in the second half of this year, with the Grade A office market leasing momentum gradually improve,” said Rosanna Tang, Head of Research, Hong Kong and Greater Bay Area at Colliers.

2021 office leasing market remains tenants centric

We forecast overall and CBD rents to fall 7% and 8% YOY, respectively in 2021. International finance and MNC firms continued to show signs of downsizing and have relocated some of their workforce to non-core locations. Pockets of demand is seen from PRC Occupiers, and some MNC wealth management, private banking and law firms.

“We have seen more inspection activity taking place across the market in Q1, as some occupiers were looking to take advantage of the lower rents and wider available options. To better secure office occupancy, we recommend landlords to be more flexible leasing,” said Chris Currie, Head of Occupiers Services, Hong Kong.

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