Grade A office rents on Hong Kong Island declines by 6.8% in September

Vacancy rates remained high at 13.4%.

According to a Knight Frank report, in September, the Hong Kong office market continued to face challenges. The overall Grade A office rent on Hong Kong island continued to drop to HK$61.9 per sq ft in September, decreasing by 6.8% YoY and 3.6% YTD. 

“Among the major submarkets, Central (Premium), Admiralty and North Point recorded a larger rental drop of -6.3%, -6.7% and -9.7% YTD, respectively. The office vacancy rate on Hong Kong Island remained at a high level of 13.4% owing to continued stagnant leasing demand,” the report said.

Here’s more from Knight Frank:

On a positive note, market momentum improved, and more expansion activity was recorded. During the month, we observed some expansion cases in the banking, finance and wealth-management sectors. Examples included Millennium Management, a US investment firm, which expanded its office space in Two IFC to 20,000 sq ft. Also, a wealth management company will expand its office space to 14,000 sq ft, moving from Hysan Place to Lee Garden One in Causeway Bay. 

Moving forward, we expect overall business sentiment and leasing activity to gradually improve, thanks to some positive catalysts, like the interest rate cut and improved stock market. Furthermore, the Government announced in the Policy Address 2024 its intention to develop a “headquarters economy” to attract enterprises from outside Hong Kong to set up headquarters and/or corporate divisions in Hong Kong. We believe that this policy may attract large MNCs to relocate to Hong Kong and could help drive office rental activity.