Hong Kong’s office rental market shows signs of recovery as more space is taken up than vacated for first time in two years

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The three months to September saw ‘net absorption’ for the first time in two years, meaning more space was taken up than vacated, according to Cushman & Wakefield

The property services giant said there had been a ‘resurgence in transactions’ in the third quarter among finance firms and insurers

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The average rent per square foot in Hong Kong has sunk 26.4 per cent from a peak of HK$75.9 in April 2019, to HK$55.9 in the third quarter of this year. Photo: Roy Issa

Lam Ka-singandHarvey Kong

Published: 8:18pm, 12 Oct 2021Updated: 10:48pm, 12 Oct 2021

Hong Kong’s office rental market is showing signs of recovery after being battered by 2019’s social unrest and the Covid-19 pandemic that immediately followed it.

The three months to September saw “net absorption” for the first time in two years, meaning more space was taken up than left empty, according to Cushman & Wakefield.

The property services giant halved its forecast for the overall average rental decline this year from a range of 8 to 13 per cent to between 4 and 6 per cent. The average rent per square foot in Hong Kong has already sunk 26.4 per cent from a peak of HK$75.9 in April 2019, to HK$55.9 in the third quarter of this year.

“Compared to the relatively low levels of tenant movement in the second quarter, we saw a resurgence of transaction activity in the third quarter with several notable deals concluded by tenants from within the banking and finance, insurance and business centre [and] co-working sectors,” said Keith Hemshall, Cushman & Wakefield’s head of office services, Hong Kong.

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As a result, the amount of office space being surrendered dropped 12 per cent from the previous quarter, equating to a reduction of 62,000 square feet in total. Surrendering means abandoning offices before the contracts expire.