Kowloon office rents to increase by up to 2% in 2024

Market activity will be driven by smaller tenants.

The imbalance between supply and demand has put the Kowloon office market in a challenging position, according to Steve Ng, Senior Director, Head of Kowloon Office Strategy & Solutions at Knight Frank. Despite the new office completion volume dropping significantly in 2024, supply from previous years has carried over. 

As a result, an abundance of office supply has emerged in Kowloon.

Here’s more from Knight Frank:

In contrast, there remains a lack of strong demand drivers in the Kowloon office market this year. In H1 2024, total transaction size, average transaction size, and average transaction rents have all declined. Most of the demand is coming from tenants looking to adjust their office sizes or tighten their budgets. The "flight-to-quality" trend continues as occupiers capitalise on the dropping rents for office upgrades.

As a result, landlords are now making adjustments to compete with others, including lowering asking rents, increasing agency fees, and offering more incentives such as fit-out allowances to attract and retain tenants.

Moving forward, we expect Kowloon office demand to remain weak, with market activities likely to be driven by smaller tenants (i.e. less than 10,000 sq. ft.). As the competition among landlords intensifies, overall Kowloon office rents are expected to see a very mild increase of 0 to 2% in 2024.