






{"id":13721,"date":"2021-04-12T10:37:07","date_gmt":"2021-04-12T03:37:07","guid":{"rendered":"https:\/\/www.asiapropertyawards.com\/?p=11968"},"modified":"2021-06-04T16:11:49","modified_gmt":"2021-06-04T09:11:49","slug":"hong-kong-tumbling-office-rents-attract-companies-back-to-central","status":"publish","type":"post","link":"https:\/\/www.asiapropertyawards.com\/en\/hong-kong-tumbling-office-rents-attract-companies-back-to-central\/","title":{"rendered":"Hong Kong tumbling office rents attract companies back to Central"},"content":{"rendered":"<p><span data-contrast=\"auto\">Central, Hong Kong\u2019s prime\u00a0<\/span><span data-contrast=\"auto\">business<\/span><span data-contrast=\"auto\"> district, sees 15-year high in its vacancy rate at 7.6 <\/span><span data-contrast=\"auto\">percent<\/span><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:259}\">\u00a0<\/span><\/p>\n<figure id=\"attachment_11969\" aria-describedby=\"caption-attachment-11969\" style=\"width: 1000px\" class=\"wp-caption alignnone\"><img decoding=\"async\" class=\"wp-image-11969 size-full\" src=\"https:\/\/www.asiapropertyawards.com\/wp-content\/uploads\/2021\/04\/processed-1.jpeg\" alt=\"\" width=\"1000\" height=\"667\" \/><figcaption id=\"caption-attachment-11969\" class=\"wp-caption-text\">Grade A office rents have dropped circa 25 percent over an 18-month period. Cozyta\/Shutterstock<\/figcaption><\/figure>\n<p><span data-contrast=\"auto\">In Hong Kong, multinational companies are moving back to Central, the city\u2019s prime business district, as office rents are tumbling by a quarter from two years ago, offering firms the opportunity to<\/span><span data-contrast=\"auto\">\u00a0get an address in Hong Kong\u2019s iconic\u00a0<\/span><span data-contrast=\"auto\">buildings<\/span><span data-contrast=\"auto\">, reported <a href=\"https:\/\/www.scmp.com\/business\/companies\/article\/3128964\/companies-head-back-central-where-tumbling-office-rents-hong\" target=\"_blank\" rel=\"noopener\">South China Morning Post<\/a>.\u00a0<\/span><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:259}\">\u00a0<\/span><\/p>\n<p><span data-contrast=\"auto\">S&amp;P is relocating to Three Exchange Square in Connaught Place, the complex that also houses the Hong Kong stock exchange and the Ho<\/span><span data-contrast=\"auto\">ng Kong International Arbitration Centre.\u00a0<\/span><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:259}\">\u00a0<\/span><\/p>\n<p><span data-contrast=\"auto\">Moreover, better rental packages have persuaded private equity firm FountainVest Partners to move to IFC, one of Hong Kong island\u2019s t<\/span><span data-contrast=\"auto\">rophy buildings. According to Colliers, FountainVest leased 9,000 square feet at HKD130 (USD16.7) per square feet,\u00a0<\/span><span data-contrast=\"auto\">around<\/span><span data-contrast=\"auto\">\u00a0seven percent lower than the rents a year ago.\u00a0<\/span><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:259}\">\u00a0<\/span><\/p>\n<p><span data-contrast=\"auto\">As stated by Savills, such moves followed Central\u2019s 7.6 percent vacancy rate, which equals 1.2 million square feet of empty space. This 15-year high vacancy rate also resulted in rents dropping by 3.8 percent. <\/span><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:259}\">\u00a0<\/span><\/p>\n<p><span data-contrast=\"auto\">Fiona Ngan, head of office services at Colliers Hong Kong, said, \u201cFlight to quality is certainly a trend which companies are looking at.\u201d<\/span><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:259}\">\u00a0<\/span><\/p>\n<p><span data-contrast=\"auto\">\u201cGrade A office rents have dropped circa 25 percent over an 18-month period so businesses can look to make the most of this drop and relocate to Central for the same cost from fringe or\u00a0decentrali<\/span><span data-contrast=\"auto\">s<\/span><span data-contrast=\"auto\">ed<\/span><span data-contrast=\"auto\">\u00a0districts,\u201d she added.\u00a0<\/span><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:259}\">\u00a0<\/span><\/p>\n<p><span data-contrast=\"auto\">During the peak of office rents in mid-2018, the gap between Central and Island East was around 175 percent, but this gap has reduced to 120 percent, as said by Colliers. Island East is <\/span><span data-contrast=\"auto\">popular among companies as a non-central office option on Hong Kong island.\u00a0<\/span><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:259}\">\u00a0<\/span><\/p>\n<p><span data-contrast=\"auto\">\u201cIn Central, rental declines and a stagnant 2020 have encouraged an increase in demand within the district, both\u00a0<\/span><span data-contrast=\"auto\">for<\/span><span data-contrast=\"auto\"> cost-saving moves that allow for changes in workplace standards, and equally, upgrading moves,\u201d mentioned Alex Barnes, head of the office leasing advisory at JLL.\u00a0<\/span><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:259}\">\u00a0<\/span><\/p>\n<p><a href=\"https:\/\/www.asiapropertyawards.com\/en\/offices-to-be-redesigned-to-conform-to-the-new-normal\/\" target=\"_blank\" rel=\"noopener\"><strong>More: Offices redesigned to conform to the new normal<\/strong><\/a><\/p>\n<p><span data-contrast=\"auto\">He added that \u201cTwo IFC for example has been a hotbed of activity in the last six months with tenants <\/span><span data-contrast=\"auto\">m<\/span><span data-contrast=\"auto\">oving and expanding from nearby buildings into a trophy building. There is pressure on the district and market as a whole, but there are pockets of activity that are\u00a0<\/span><span data-contrast=\"auto\">centred<\/span><span data-contrast=\"auto\">\u00a0on these trends.\u201d\u00a0<\/span><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:259}\">\u00a0<\/span><\/p>\n<p><span data-contrast=\"auto\">Daniel Wong, Midland IC&amp;I CEO, said that other submarkets are also likely to see further rental drops,\u00a0<\/span><span data-contrast=\"auto\">attracting<\/span><span data-contrast=\"auto\"> more companies. <\/span><span data-contrast=\"auto\">Kowloon East is probable to underperform, with rents declining between five and 10 percent this year due to oversupply.\u00a0<\/span><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:259}\">\u00a0<\/span><\/p>\n<p><span data-contrast=\"auto\">\u201cAs a trend, we <\/span><span data-contrast=\"auto\">think<\/span><span data-contrast=\"auto\">\u00a0that\u00a0<\/span><span data-contrast=\"auto\">decentralisation<\/span><span data-contrast=\"auto\">\u00a0will still take place,\u201d Wong added.\u00a0<\/span><span data-contrast=\"auto\">\u00a0<\/span><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:259}\">\u00a0<\/span><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Central, Hong Kong\u2019s prime\u00a0business district, sees 15-year high in its vacancy rate at 7.6 percent\u00a0<\/p>\n","protected":false},"author":12,"featured_media":19693,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"inline_featured_image":false,"footnotes":""},"categories":[92,1],"tags":[1298,171,1299,1300],"class_list":["post-13721","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-news","category-property-report","tag-central-district","tag-hong-kong","tag-office-rent","tag-relocate","news_country-hongkong","news_author-property-report"],"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v28.3 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>Hong Kong tumbling office rents attract companies back to Central | Asia Property Awards<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" 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