Hong Kong’s office segment is picking up due to leasing demand from mainland Chinese law firms and financial groups, supported by a buoyant stock market that has seen an increasing number of companies launch initial public offerings (IPOs) in the city.
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Office-leasing activity in August grew for a fifth straight month, with tenants absorbing 313,800 sq ft of net space, according to data compiled by JLL. The overall vacancy rate in the city increased 0.1 per cent to 13.5 per cent month on month in August, despite the completion of One Causeway Bay, which added more than 1 million sq ft of space, the property consultancy added.
Meanwhile, office rents declined 0.2 per cent month on month in August, the smallest decrease so far this year, JLL added.
This could be the start of a recovery for the embattled office sector, which has been plagued by an abundance of new completions coupled with a sluggish economic recovery, according to analysts.
“Despite interest rate pressure and softening demand presenting immediate challenges to the office-leasing market, new drivers are emerging in Hong Kong’s office sector,” said Jack Tong, a director at Savills. “This is driven by a resurgent financial sector and robust end-user sales activity, with office rents in Central expected to recover ahead of the broader market over the next few years.”
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One notable leasing deal last month was by Jun He Law Offices. The Beijing-based law firm leased an entire floor covering 14,830 sq ft at AIA Central in Central, the main business district.