Hong Kong’s IPO market slump hurts office leasing demand but insurance boom picks up some slack: Savills
- Grade A office rent in Central is down for the fourth year in a row since 2019, as Hong Kong’s initial public offerings (IPO) market struck a 20-year low
- Robust demand from the insurance sector and a strong IPO pipeline has brightened the outlook for the second half of the year
A slowdown in public markets has tapped the brakes on office leasing momentum in Hong Kong, but a turnaround in deal activity, with a boost from several blockbuster listings which are in the pipeline, may improve performance in the second half of the year, according to real estate firm Savills.
Office rents in the city’s business district saw a decline in the January-June period as the initial public offerings (IPO) market struck a 20-year low with just HK$17.8 billion (US$2.2 billion) raised, according to Savills Research.
Grade A office rent in Central is down for the fourth year in a row since 2019, according to Savills.
“The slow IPO market further dampens the business prospects of financial institutions, with slow take-up evident across all districts,” said Jack Tong, director of research and consultancy at Savills.
This especially affected banks and brokerage firms from mainland China with offices in Central, according to the report.
However, there are signs of a potential market recovery in the second half of 2023 for IPOs as the strong sequential rise of 55 per cent in the second quarter is seen extending its run.
