Corporate expansions driving Hong Kong mark
According to JLL’s latest Property Market Monitor released this week, net take-up in Hong Kong’s overall office market amounted to 68,800 sq. ft in November 2017, with average monthly rent reaching HKD 71.7 per sq. ft — 0.3% higher than in October 2017. The overall vacancy rate in the Grade A office market decreased to 4.8% compared to 4.9% in October.
Leasing demand continued to be underpinned by the expansion requirements of financial services companies. In Central, Ping An Bank reportedly leased 13,900 sq ft at One Exchange Square, expanding from offices in Bank of America Tower, while LGT group reportedly expanded by 27,800 sq ft at Two Exchange Square.
Rents in Central grew by 0.3% m-o-m on the back of a 0.6% m-o-m rise in rents in Grade A3 offices, where vacancy rate remained below 2%. Rents in Kowloon East rose for the second consecutive month, advancing by 0.4% m-o-m on the back of tight vacancy within the Millennium City portfolio.
Alex Barnes, Head of Hong Kong Markets at JLL said, “Chinese financial service companies drive the vast majority of demand in Central. Demand from Chinese corporates will be the engine room of the Central office market into 2018.”
Hong Kong’s retail market continues its recovery and investors continue to buy into it. Link REIT sold 17 retail centres in non-core areas (about 1.2 million sq ft, IFA), along with 8.249 car-parking spaces, for a total consideration of HKD 23 billion to a consortium led by GAW Capital Partners, with estimated initial yields ranging from 2.3% to 3.2%.