Hong Kong Monthly

This report analyses the performance of Hong Kong’s office, residential and retail property markets.

OFFICE
Landlords looking to keep premises occupied 

Hong Kong Island With the rampant spread of COVID-19 worldwide, business sentiment has been severely affected. The weaker global economy and the across-the-board impact of the virus has made businesses very cautious. Many office tenants, both local and multinational, have tended to delay or put on hold their real estate decisions, resulting in low levels of leasing activity.

That said, we note some green shoots in the office sector. Transactions are still occurring, with some occupiers proactively looking for opportunities for bargain deals, either for consolidation or expansion against the backdrop of an overall downward trend in rents.

Landlords in general have been more flexible in lease negotiation and more willing to offer favourable renewal terms to retain tenants. Since vacancy rates remained relatively low (Central: 3.7%, overall Hong Kong Island: 4.4%), we do not see any possibility of substantial rental reductions. Instead, we expect mild downward adjustments in rents in the coming months.