(26 June 2024, Hong Kong) The overall vacancy rate of Grade A offices rose to 13.5% at the end of May, mainly due to the new completions, according to JLL’s latest Hong Kong Property Market Monitor released today.
Cheung Kong Center II in Central and KTR 350 in Kwun Tong both completed in May. Partly driven by new completions, the overall market recorded a positive net absorption of 21,200 sq ft during the month. However, concurrently, Central and Kowloon East’s vacancy rose to 12.0% and 18.5%, respectively, due to the new completions.
In Wanchai/Causeway Bay and Hong Kong East, the vacancy dropped 0.2 and 0.1 percentage points, respectively. Meanwhile, the insurance sector continued its momentum of expansion. In a notable case, AIA International leased one floor of 18,400 sq ft (GFA) at The Gateway Tower 2 in Tsimshatsui, to expand within the building.
Sam Gourlay, Head of Office Leasing Advisory at JLL in Hong Kong Island, said: “Insurance companies remain the most active tenants in the office leasing market. Despite new building completions pushing vacancy rates up, we expect this new office space to be gradually absorbed as tenants seek upgraded offices, supported by a significant drop in rents.”
Cathie Chung, Senior Director of Research at JLL, said: “Overall net effective rent dropped further by 0.8% m-o-m in May, for the 25th consecutive month since May 2022. Among the major office submarkets, Central and Hong Kong East saw rents decrease further, by 1.3% and 0.8%, respectively. Rents also fell in the Tsimshatsui and Kowloon East submarkets, declining by 0.5% and 0.9%, respectively.”
