Hong Kong protests weigh on office market as available space in Central rises to 14-year high, rents fall 3.2 per cent

By Chad Bray and Martin Choi chadwick.bray@scmp.com / https://www.scmp.com/business/companies/article/3031464/hong-kong-protests-weigh-office-market-available-space-central?utm_medium=partner&utm_campaign=contentexchange&utm_source=EdgeProp | October 8, 2019 5:24 AM SGT
The outlook for Hong Kong's property market is bleak after rents for grade A office space in Central "softened significantly" and availability climbed to a 14-year high in the third quarter.
Cushman & Wakefield said on Thursday that tenants generally held off committing to relocations or expansions in the quarter ended September amid concerns about the city's slowing economy and as anti-government protests intensified.
Office rents in greater Central " Central, Admiralty and Sheung Wan " fell by 3.2 per cent in the quarter, the biggest quarterly drop since 2012, the property consultant said. Office space was leasing for HK$133.7 per square foot on average in greater Central in the third quarter.
"The overall [office] leasing sentiment has worsened, and is likely to remain weak over the remainder of 2019 and into 2020. So far, we haven't seen any signs or factors which suggest that there could be a sudden improvement in office leasing sentiment," said John Siu, managing director of Cushman & Wakefield in Hong Kong.
Net absorption " a measure of the net change in commercial office space supply " dropped from 513,697 sq ft in the second quarter to 295,214 sq ft in third quarter, indicating less space had been leased. Hong Kong East was one of the few locations in the city that saw an increase in new leases in the third quarter.
"Office space in Hong Kong East is becoming more attractive because the rent is less than half of that in Central. The district has also started to mature as a business hub, attracting multinational corporations such as law firms and others that would not have thought of leaving Central 20 or 30 years ago," Siu said.
Office rents in core areas, such as Central, Wan Chai and Causeway Bay, were likely to continue to decline over the coming months amid weak demand, as more multinational corporations move away from core areas to noncore areas, Siu added.
The property consultant predicted that office rents in core areas...