Hong Kong office space rates predicted to keep falling

If you are planning to enter the Hong Kong market or thinking about upgrading your office space in Hong Kong, over the next 6 to 12 months you might find some deals.  

Weakening demand from the financial industry along with a rise in competition from other locations within the city like East Kowloon and Tsim Sha Tsui (TST) are giving pressure to prime office space in Central Hong Kong. 

Colliers International has predicted that rents in Central will fall by 8% over the next 12 months and prime office rents in Central already fell 3.8 percent in the third quarter to an average of HK$148 per square foot.  

In the bust to boom cycles Hong Kong often goes through, office rents can fall and rise drastically; from 2001 to 2003 Central office rents fell 40% and from 2008 to 2009 the market saw major consolidation of office space. 

HSBC’s has decided to reduce their local staff by 3000 over the next 3 years, Barclays, Bank of America, UBS and JP Morgan have all mentioned the intention to reduce over head in Hong Kong.

Even with the additional competition and weakening demand, don’t expect to see a glut of prime office space in Central, The lack of supply in Central is expected to continue due to economic slow down.

Hong Kong is one of Asia’s main banking centers, with weakening demand in the financial industry many companies are seeking lower rental costs and are consolidating locations, so if you have been thinking about entering the market here or you are eyeing an office upgrade , this might be the time to look for a deal.