Kowloon may attract more Chinese firms as office-rental cost gap narrows between Greater Bay Area cities and Hong Kong
- The average office rent fell nearly 10 per cent in May in Kowloon, leaving rents in parts of the district close to what they are in Shenzhen and Guangzhou
- Fewer Chinese enterprises are based in Kowloon than on Hong Kong Island, but the gap has closed significantly compared with five years ago
Falling office rents in Kowloon have reduced the price premium between the area of Hong Kong and mainland cities in the Greater Bay Area, attracting more Chinese firms to set up shop in Kowloon, according to property consultants Colliers and Knight Frank.
The most recent and worst wave of the Covid-19 pandemic in Hong Kong dragged down office rental prices, and the average office rent in Kowloon fell 9.3 per cent to HK$26.90 (US$3.43) per square foot in May.
Rental prices in the Greater Bay Area on average are 20 to 25 yuan [HK$23.52 to HK$29.38] per square foot per month, while in Kowloon they are between HK$25 and HK$30 per square foot, according to Patrick Mak, executive director of Knight Frank.
Kowloon is experiencing a supply surplus cycle right now, said Mak, who added that only outlying parts of Kowloon are seeing office rents close to what they are in Guangzhou and Shenzhen, while the central part is still far more expensive.
“The Kowloon grade-A office market demonstrated much stronger momentum since the easing of the fifth wave of the epidemic,” Mak said. “New set-ups of Chinese mainland enterprises, relocations from Hong Kong Island, and office upgrades are the major sources of new demand in Kowloon that fuelled the momentum. We have also witnessed growing demand for medical real estate in Hong Kong.”
