COVID-19 has ushered in a consolidation phase for Hong Kong’s office market with the rental gap narrowing to less than 70 per cent between CBD (Central and Admiralty) and non-core areas, a new report has found.
According to Colliers International’s After Covid-19: New Trends of the Hong Kong Office Market, the pandemic is compounding an already weak economy, meaning CBD rents are expected to fall by 18 per cent in 2020, after a 6 per cent drop in 2019.
But Colliers International Hong Kong Head of Office Services, Fiona Ngan, told WILLIAMS MEDIA that with such a change comes opportunity.
At a glance:
- Colliers International has released After Covid-19: New Trends of the Hong Kong Office Market, examined the ‘recentralisation’ opportunities available in Hong Kong as a result of COVID-19.
- According to Colliers International, CBD rents are expected to fall by 18 per cent in 2020, after a 6 per cent drop in 2019.
- Colliers International said the pandemic had also prompted corporates to review their technology strategy.
“Hong Kong is one of the most dynamic office leasing markets in the world, and there is high competition to secure lucrative space,” she said.
“However, the narrowing rental gap and upcoming future supply around Central will provide more CBD leasing options, especially for professional and PRC firms to explore recentralisation opportunities.
“In addition, Hong Kong has seen success in containing the COVID-19 transmission.
“With people exploring going back to work, employers can take advantage of falling rents to upgrade and transform their workplace, in order to better suit the ‘new’ needs of their staff.”
Colliers International Hong Kong Head of Office Services Chris Currie said Hong Kong was still attractive as a gateway city, especially when considering major development projects in and around Central, and Hong Kong as a whole.
“The fundamentals of Hong Kong remain the same,” he said.
“It’s a supply-challenged market which provides confidence for long-term tenant demand with stakeholders needing to be flexible and navigate short-term volatility.
“Layering in the narrowing rental gap and the upcoming future supply in Central, we believe demand will only increase as tenants look to explore leasing options to better utilise their space and become more cost-effective of their current rental rate as flight-to-quality emerges as a key trend.”
Commenting on COVID-19’s impact on the workplace, Colliers International Head of Landlord Representation, Chris Hui, said the pandemic had prompted corporates to review their technology strategy.
“With the world undergoing a biggest work-from-home experiment, it’s highlighted some weaknesses, and strengths, in current approaches as organisations realise, they need to be flexible to better serve their people in connecting them to the business, and the workplace,” he said/.
“Asset owners need to adapt to provide solutions that meet the needs of tenants.
“For modern buildings, they tend to have new features and wellness certification such as LEED and WELL, which will be attractive to tenants.
“For older stock, reviews need to be conducted to asses retro fitting to improve cleanliness, well-being of building occupiers and ease concerns around safety in the workplace; subject to capital investment.”
Click here to download the report.
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