Office vacancies persist while retail sector shows signs of resilience amidst economic recovery
The Hong Kong Grade A office market is experiencing an increase in demand due to new office completions. According to The World Property Journal, the reopening of borders and economic recovery have improved market sentiment. Despite a negative net absorption of 245,100 square feet in April, the vacancy rate only slightly increased to 12.3 percent.
Net effective rents dropped by 0.3 percent in April, with Central and Kowloon East seeing a decrease of 0.5 percent in rentals while Tsimshatsui experienced a marginal increase of 0.3 percent. In the retail market, leasing activities have accelerated in core locations, contributing to an improved sentiment in the retail investment market.
The Straits Times reported Hong Kong’s commercial real estate market is experiencing a prolonged slump as office buildings remain vacant and rents and sale prices decline. Western banks are reducing their office space due to slower deal-making and China’s tightening control over the financial hub.
Chinese businesses, expected to fill the gap, are not taking up as much space as anticipated. The city’s landlords are losing their best customers as Wall Street banks scale back expansion plans, and mainland companies are not filling the void quickly enough. The market is further impacted by the construction of new buildings, adding to the oversupply.
Cushman & Wakefield’s Hong Kong Property Markets Review and Outlook 1H 2023 report indicates that Hong Kong’s retail market is recovering with increased tourist spending, while the office leasing market is still struggling. The Laotian Times discussed how retail sales rose by 21 percent year-on-year in the first five months of the year.
However, the office leasing market saw negative absorption in Q2, with downsizing by multinational companies contributing to the decline. The availability rate rose slightly, impacting office rents. In the residential market, higher interest rates led to a decline in transactions and fluctuating home prices towards the end of Q2.
The Property Report editors wrote this article. For more information, email: [email protected].
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