OFFICE

Unheralded decentralisation trend in Kowloon amid weak sentiment. 

Hong Kong Island

Along with the improving COVID-19 situation in Hong Kong and the return to normal economic activity, market sentiment has improved, with a higher level of leasing activity in the office market. Most of the new leases in Central were premises of no more than 10,000 sq ft, while isolated new leases of larger areas were found outside the CBD area.

With no quick escape in sight for COVID-ravaged economies, many tenants continued to look for cost saving solutions, which include rental abatement, rental deferment or lease
restructuring to ease their financial pressure. But rental reductions were seen mainly for office tenants with a retail presence and were implemented only on a case-by-case basis.

As a small open economy, Hong Kong has seen the worst economic performance in the first quarter of the year. With the government forecasting a GDP contraction of 4% to 7% over 2020, office tenants will remain cautious in the coming months.