Hong Kong office market recovery sees return of en bloc sales

HONG KONG (Sept 1): The recovery of Hong Kong office market has renewed investor interest in en bloc properties, according to JLL Asia Pacific Office Investment Highlights Mid-Year Review 2015.

“Driven by expansion requirements from a handful of occupiers at the lower end of the market, the Wanchai occupier market recorded its strongest monthly growth in two years,” said the report.

The vacancy rate for Grade A office market as at end-July stood at 3.2% with Central Hong Kong at 1.4%, Wanchai (2%), Hong Kong East (0.8%), Tsimshatsui (1.7%) and Kowloon East at 5.9%.

The Hong Kong Grade A office market enjoyed solid, net take-up rate of 253,000 sq ft as at end-July, supported by robust growth in Central Hong Kong and Wanchai. JLL noted that Central Hong Kong and Wanchai enjoyed a healthy net take-up rate of 79,100 sq ft and 41,100 sq ft, respectively.

Among the best performing buildings in the market, International Commerce Centre in West Kowloon saw its vacancy rate decline from 6.1% to 3.2% in July, after successfully securing several tenants from the financial services and IT sectors.

Meanwhile, the major correction in the Mainland Chinese stock markets had little immediate effect on leasing demand from People Republic of China (PRC) companies.

“In Central PRC, financial services and securities trading firms accounted for about 45% of new lettings. Bank of Shanghai expanded in-house at Citibank Plaza while another PRC bank leased a whole floor at AIA Central (13,600 sq ft) for its newly established investment banking division,” it said.

Meanwhile, property transaction in the residential sector fell 6.6% month-on-month based on data released in July, while the retail sector saw a decline of 14.9% in May and 10.4% in June for sales of jewellery and watches year-on-year. 

"Visitors from Mainland China continued to slow, down by 1.8% y-o-y in June compared with a 5.0% y-o-y increase in May. The decline was partly attributed to the once-per-week cap imposed on multiple-entry permits issued to visitors from Shenzhen," said the report.