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News Release

Hong Kong and Macau

Office market remains strong despite stock market rout

Vacancy rate in Central tightens to its lowest level since just prior to the Global Financial Crisis


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HONG KONG AND MACAU, 23 September 2015 – The Hong Kong office market remained strong despite the recent rout in the local and mainland stock markets, according to JLL’s Hong Kong Property Market Monitor research report published this September.

Supported by office take-up of 30,500 sq ft in Central and 49,600 sq ft in Wanchai/Causeway Bay, net take-up in overall office market amounted to 151,400 sq ft in August. While overall net take-up was just over half of the total recorded in July, leasing demand remained strong, with shadow space being backfilled across the market. PRC demand remained intact despite the plunge in Mainland stock markets. A Shanghai-based law firm expanded its office at One Exchange Square, while a PRC bank took up an entire floor at Two IFC to meet its upgrade and relocation requirements.

Paul Yien, Regional Director of Hong Kong Markets at JLL, said, “Despite the recent uncertainties in the Hong Kong and China stock markets, PRC companies are still positive about the business outlook and remain active in leasing office spaces in Hong Kong. The closer integration between Mainland China and Hong Kong, coupled with the expectation that more cross-border investment channels will be available in the future, continue to underpin the confidence of PRC companies in establishing or expanding their presence in Hong Kong.  In fact, Hong Kong remains as a strategic stepping stone for their international expansion.”

“As of end-August, the vacancy rate in Central had tightened to a low of 1.3%, which is its lowest level since just prior to the Global Financial Crisis in 2008, while the overall office vacancy rate was down to 3.0%,” Yien added.

Kowloon East was the only major office submarket seeing negative net take-up, with several sizable tracts of stock returning to the market. Tenants with larger floor-plate requirements, however, continued to face limited options, with about 80% of vacant space available in the submarket being located in strata-titled buildings.

In view of the renewed interest in office properties and strong pricing levels, some developers have indicated that they may consider selling properties in their portfolios. Examples include an office development site in Kowloon Bay under Swire Properties and Tower 535 in Causeway Bay under Phoenix Property Investors.

Grade A Office Vacancy Rates ​
PeriodOverallCentral

Wanchai /

Causeway Bay

Hong Kong EastTsimshatsuiKowloon East
End-August3.0%1.3%1.7%0.7%1.6%6.2%
End-July3.2%1.4%2.0%0.8%1.7%5.9%
Source: Research, JLL