Despite the slower pace of rental falls and increased leasing activity, vacancy rates are climbing, says UMA SHANKARI
THE Hong Kong office market is mirroring the trend seen lately in the Singapore market – rents are still falling, but at a slower rate. Data from property firm Savills showed that overall Grade A office rents fell by 5.8 per cent in the second quarter of 2009. This is a slowdown from the decline of 11.1 per cent seen in Q4 2008 and 10.2 per cent in Q1 2009.
‘The results indicate that the rate of decline of office rents has slowed, suggesting that we are approaching the bottom of the current down cycle,’ said Savills in a report.
Savills Research now expects the rate of decline of Grade A office rents to slow over the second half of 2009 and record another 10 per cent slide for the remainder of 2009 before stabilising.
Knight Frank, which does monthly rental updates, noted that the month-on-month decline in the average Grade A office rent slowed to 1.9 per cent in July, after falling 3 per cent in June. Knight Frank expects that Grade A office rents will bottom out by Q4 of this year.
The trend is similar to what is happening in Singapore. Office rents in Singapore fell for the fourth consecutive quarter in Q3 2009, but the pace of decline has eased on the back of returning business confidence, said CB Richard Ellis (CBRE). Continue reading
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