HONG KONG: Knight Frank, an international property consultancy said the average rent of Grade A offices in the island state will rise 15% this year. This is due in part to the rise in the number of foreign companies being set up in Hong Kong and this uptrend is expected to continue in 2010, which will further fuel demand for office space.
The core business districts of Central and Admiralty will continue to lead the recovery of the Grade A office leasing market, with low vacancies and sustainable demand. The consultancy firm, however, expects non-core areas may underperform the overall market due to relatively high vacancy rates and competition from new offices in the Kowloon East area.
The Prime Office monthly report – January 2010 said the office leasing market was relatively quiet during the December holiday season but activity swiftly resumed in the first half of January.
“Demand came mainly from small and medium-sized finance companies, as many large financial institutions had over-expanded before the outbreak of the recent financial crisis,” it added. The report observed that corporate expansion was more visible over the past month alongside increasing signs of the local economic recovery.
Average rents of Grade A offices rose 2.3% in Hong Kong in December 2009, the fastest monthly growth since May 2008 – with all business districts recording rent increments, Knight Frank added.
However, rental gains in Central slowed to 2.1% but rent growth in Kowloon East grew to 3.2% as occupancy in new office buildings such as Landmark East and Kwun Tong 223 improved.
The areas, Wan Chai, Causeway Bay, North Point and Quarry Bay underperformed compared with the overall market, as substantial amounts of Grade-A space were vacated in those districts, the report said.
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