Advertisement
Hong Kong property
Business
Alex Barnes
Alex Barnes

Concrete Analysis | Covid-19 has provided Hong Kong property developers with opportunity to evolve world’s most expensive office market

  • Hong Kong is at the beginning of a significant and fundamental real estate change
  • Central is at no risk of losing its place as a high-end business district, or the most expensive

Reading Time:3 minutes
Why you can trust SCMP
Central remains and will continue to be a prime and well sought out location. Photo: James Wendlinger
Alex Barnes

A long-term trophy among global property markets, Hong Kong has needed a myriad of external events to accelerate long-awaited changes in real estate.

Advertisement
Hong Kong’s high office rents and low vacancy rates have consistently made news headlines. More recently, this has changed to significant rental declines, pushed by economic challenges and Covid-19. But even with year-to-date adjustments in rents amounting to more than 20 per cent declines in average rentals, according to JLL research, Hong Kong Central remains the most expensive place globally to rent an office.

And despite a less than 9 per cent vacancy rate for the whole of Hong Kong (not at all dramatic in most global markets), the city is at the beginning of a significant and fundamental real estate change. A change that will ultimately benefit the structure of the city and the working relationships of many of its occupants.

Decentralisation has been a well-documented trend for years, and one that bucks the high price tag in nearby districts. Despite this, Central is at no risk of losing its place as a high-end business district, or the most expensive. It remains and will continue to be a prime and well sought out location, but increasingly for smaller, high rent paying businesses, when compared with emerging core districts. It is clear that Central is no longer the only location its traditional occupants will consider.

Businesses the world over have adopted flexible people strategies that allow for partial or full work from home through the pandemic. Expectations on everything from commute times to working hours to flexible working policies are up in the air. As a result of the world’s largest work from home experiment, it has become clear that many of our preconceived notions around locational needs for travel or even face-to-face meetings have been challenged.
Advertisement
New office supply coming on to the market from 2022, coupled with the potential for future government sites being drip fed into key markets for the coming few years, is likely to shape a long-term supply boom for Hong Kong, its developers and occupants. What is more is that this is being delivered into a wide range of business districts, from Quarry Bay to Kai Tak to West Kowloon, and for the first time in many years, Central. The choice for occupiers will be huge, varied in price, scale, offering and location.

Developers are working hard to understand the post Covid-19 occupancy world, what they can do to enhance the well-being and offering of their potential clients, and what this means for financial returns. They will be marketing to an audience expecting more from their real estate, for their people, around greater amenities and the well-being of their staff. Not to mention, a focus on improved returns on rental investment.

loading
Advertisement