HONG KONG, April 9, 2013 /PRNewswire/ --
According to Cushman & Wakefield's latest research report, Office MarketBeat, performance of Greater Central and non-core districts maintained its divergent trend. Greater Central rents were relatively unchanged from the previous quarter, while rents outside of Greater Central were generally on the rise.
Limited office availability in non-core districts, no new office supply and seasonal factors translated into a quiet leasing market in Q1 2013. In line with ongoing cost control measures by occupiers, which is causing some occupiers to sublet or even surrender their office space, there was a decline in net absorption when compared to the previous quarter.
In Greater Central, indicators hinted that the market began to stabilise after more than a year of softened demand and a significant drop in rents. While some more prime space was released back into the market and net absorption was slightly negative, the availability rate remained stable at 7.3%. Greater Central rents averaged HK$98.77 per sq ft in Q1 2013, relatively unchanged from a quarter earlier.
As more redevelopment projects were confirmed over the last quarter occupiers are facing growing mobility constraints, while at the same time, landlords further increased their rental expectations. Stable to rising rents were recorded throughout all districts apart from in Tsim Sha Tsui, where some new excess space placed downward pressure on rents.
Looking forward, the global economy will brighten with improved growth, therefore enhancing output in 2013 for the services sector, and spurring demand for new office space. Occupiers are likely to face challenges posed by limited new supply and existing low availability.
Rents will further experience some downward pressure in the near-term in Greater Central while stable demand and low availability in non-core markets will continue to encourage moderate to healthy rental growth.
Gary Fok, Head of Commercial said, "Hong Kong office market experienced stable growth in Q1 2013. There were only two significant new office lease transactions involving more than 40,000 sq ft last quarter. A few new office set-up and expansion cases were recorded in Greater Central, while tenants continued to seek out more cost effective options in other districts. The new office buildings and office projects under construction in Kowloon East will continue to attract occupiers to relocate their offices to the area. The relatively low availability rate supports rents to grow steadily in the rest of 2013."
| HONG KONG GRADE A OFFICE MARKET STATISTICS | ||||||
| SUBMARKET | INVENTORY (SF NET) |
AVAILABILITY RATE | UNDER CONSTRUCTION | GRADE A NET EFFECTIVE RENT (HK$/SF/MTH) | % CHANGE 4Q12 VS 1Q13 |
|
| 4q12 | 1q13 | |||||
| Greater Central (Prime Buildings) |
7,555,053 | 9.9% | 0 | 104.47 | 105.47 | + 1.0% |
| Greater Central (Prime & Grade A Buildings) |
15,430,786 | 7.3% | 355,200 | 98.43 | 98.77 | + 0.3% |
| Wan Chai / Causeway Bay | 8,133,903 | 5.4% | 0 | 62.87 | 63.62 | + 1.2% |
| Hong Kong East | 7,344,844 | 1.9% | 0 | 42.45 | 44.77 | + 5.3% |
| HONG KONG ISLAND | 30,909,533 | 5.5% | 355,200 | 83.97 | 84.83 | + 1.0% |
| Tsim Sha Tsui | 7,920,576 | 1.5% | 0 | 61.14 | 59.90 | - 2.0% |
| Kowloon East | 9,132,222 | 4.5% | 4,129,800 | 30.35 | 31.71 | + 4.5% |
| Kowloon West | 2,908,636 | 1.7% | 957,700 | 38.69 | 41.02 | + 6.0% |
| Kowloon Others | 1,300,011 | 0.7% | 0 | 30.49 | 32.11 | + 5.3% |
| KOWLOON | 21,261,445 | 2.8% | 5,087,500 | 40.71 | 42.12 | + 3.5% |
| TOTALS | 52,170,978 | 4.4% | 5,442,700 | 75.37 | 76.60 | +1.6% |
Source: Cushman & Wakefield
| MAJOR OFFICE NEW LEASE TRANSACTIONS IN Q1 2013 | ||||
| TENANT | BUILDING | DISTRICT | AREA (SQ FT) | REASONS |
| Bank of America Merrill Lynch | Kowloon Commerce Centre Tower 2 | Kwai Chung | 117,000 | Relocation |
| PCCW | The Longbeach | Tai Kok Tsui | 40,000 | Relocation |
| HK Monetary Authority | Hopewell Centre | Wan Chai | 25,000 | Relocation |
| Pfizer | Kerry Centre | Quarry Bay | 24,200 | Relocation |
| JP Morgan | One Island East | Quarry Bay | 21,000 | Expansion |
| JP Morgan | Chater House | Central | 18,000 | Expansion |
| Manulife | One Pacific Centre | Kwun Tong | 17,320 | Expansion |
| Industrial Bank of China | ICBC Tower, Citibank Plaza | Central | 16,700 | New set up |
| S.W.I.F.T | One Island East | Quarry Bay | 15,500 | Relocation |
| Crabtree & Evelyn | Gateway Tower 2 | Tsim Sha Tsui | 11,500 | Expansion |
Source: Cushman & Wakefield
About Cushman & Wakefield
Cushman & Wakefield is the world's largest privately-held commercial real estate services firm. The company advises and represents clients on all aspects of property occupancy and investment, and has established a preeminent position in the world's major markets, as evidenced by its frequent involvement in many of the most significant property leases, sales and assignments. Founded in 1917, it has 253 offices in 60 countries and more than 15,000 employees. It offers a complete range of services for all property types, fully-integrated on a global basis, including leasing, sales and acquisitions, debt and equity financing, investment banking, corporate services, property management, facilities management, project management, consulting and appraisal. The firm has more than US$4 billion in assets under management. A recognized leader in local and global real estate research, the firm publishes its market information and studies online at www.cushmanwakefield.com/knowledge. In Greater China, Cushman & Wakefield maintains seven market-leading offices in Beijing, Shanghai, Chengdu, Guangzhou, Shenzhen and Hong Kong. More information is available at www.cushmanwakefield.com.
