20/5/2019

Market Update Summary - May 2019

Economic uncertainly results in softer office rental growth

The overall market recorded a modest net absorption amounting to 12,200 sq ft, behind a 71% m-o-m growth in new lettings. Leasing requirements were focused in Hong Kong East as tenants continued to seek more cost effective options to set up offices and expand into. For instance, the Securities and Futures Commission reportedly leased 182,700 sq ft at One Island East in Quarry Bay, relocating and expanding out of Central.

Despite recording negative net absorption for the sixth month in a row, new lettings in Central were underpinned by expansion requirements from banking/finance and legal firms within the submarket. Notably, Goodwin Procter leased 13,100 sq ft at Edinburgh Tower to expand out of its existing space in Central.

Rental growth in the overall market slowed down to 0.2% m-o-m in April as the vacancy rate remained just slightly below 5%. The strongest growth was recorded in Hong Kong East (0.4% m-o-m), where the vacancy environment was the tightest among the major office submarkets.

Creditors on behalf of CEFC China Energy have reportedly sold 3 floors at Convention Plaza in Wanchai to local investors for HKD1.8 billion (HKD 36,324 per sq ft) via equity transfer, The selling price is about 30% higher than the price paid back in September.

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