15/5/2018

Market Update Summary - May 2018

Strata-Titled office transactions surpass the HKD per HKD
60,000 per sq ft mark

Net absorption in the overall market amounted to 634,200 sq ft in April, buoyed by the realization of pre-commitments at Mapletree Bay Point in Kwun Tong, which received its Occupation Permit (OP) during the month. The largest deal reported during the month, involved DBS leasing seven floors (138,000 sq ft) at Two Harbour Square in Kwun Tong, consolidating their back office operations out of Millennium City 6 (Kwun Tong) and One Island East (Quarry Bay).

Leasing demand in Central was underpinned by expansion requirements from the banking and professional services sectors, accounting for 53% of new lettings during the month. PRC corporates remained a key driver of demand with Guotai Junan reportedly leasing 10,100 sq ft at Man Yee Building.

Rents in the overall market grew at their fastest pace in more than two years, up 1.1% m-o-m amid a tight vacancy environment and an active leasing market. With tenant demand focusing on Hong Kong East and Kowloon East—accounting for 76% of the new lettings, in terms of floor area, in April—rents to advanced by 3.1% m-o-m and 1.2% m-o-m, respectively.

The investment market for offices continued to reach new heights after whole floors in the high zone at Far East Finance Centre and 9 Queen's Road Centre were reportedly sold for HKD 660.0 million (HKD 61,111 per sq ft) and HKD 514.2 million (HKD 60,000 per sq ft), respectively, breaching the HKD 60,000 per sq ft level for the first time.

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