11/4/2016

Market Update Summary - 3rd Quarter 2016

Market Update Summary - 3rd Quarter 2016

Lease expiries along with the on-oing relocation of tenants affected by the upcoming redevelopment of Warwick House and Cornwall House in Quarry Bay contributed to a net withdrawal of 76,400 sq ft in the overall market in September.

In Central, leasing demand was underpinned by requirements from PRC financial
institutions, which accounted for 70% of all new lettings, in terms of floor area leased. Bank of Bohai expanded in-house at Two IFC while Shanghai Pudong Development Bank leased 11,200 sq ft (lettable) at One Pacific Place in Admiralty for its newly established investment banking arm.

Outside of Central, insurers were active, leasing about 75,000 sq ft in Kowloon. Prudential expanded about 29,500 sq ft (gross) within The Gateway portfolio in Tsimshatsui while Sun Life expanded in-house at The Harbourfront Two in Hunghom (about 34,700 sq ft, gross).

Led by growth in the mid-range of the market, rents in Central grew
1.0% m-o-m. In contrast, rents in Tsimshatsui retreated by 0.8% m-o-m as
landlords softened their stance on asking rents in an attempt to boost occupancy amid mounting supply side competition from new office
developments in Kowloon East.

Sustained investment interest saw deal activity pick up with Henderson Land selling Golden Centre in Sheung Wan for HKD 4.37 billion (HKD 28,000 sq ft). Prosperity REIT was close to acquiring Kwun Tong View in Kwun Tong for HKD 1.88 billion (HKD 12,951 per sq ft) before being thwarted by a shareholder vote.

The government has released the first commercial development site in the Kai Tak Development Area (KTDA) (NKIL 6557) for sale via public tender, with a closing date in November. Located near the future Kai Tak MTR Station, the site has a maximum buildable GFA of 1.1 million sq ft.
Conditions of sale stipulate two buildings must be erected on the site with identical heights and exteriors. The completed development cannot be stratified for sale.

Articles
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