Hong Kong office transactions, leasing drop in second quarter: property consultancy

FAN Editor
Highrise residential and commercial buildings are seen at Hong Kong island
Highrise residential and commercial buildings are seen at Hong Kong island August 29, 2012. REUTERS/Bobby Yip

July 16, 2019

HONG KONG (Reuters) – Hong Kong’s commercial property investment and office leasing activities both weakened during the second quarter, hurt by the ongoing U.S.-China trade conflict, real estate consultancy CBRE said on Tuesday.

Transaction volume of commercial property totaled HK$21.1 billion ($2.70 billion), 6.2% lower than the first quarter, with investment volume by Chinese investors falling to the lowest quarterly total since Q3 2015, CBRE said.

But sentiment is expected to improve if interest rates stay low for a longer period and trade conflict does not escalate, it added.

For office leasing, rents declined for the first time since Q2 2014 due to subdued demand, with overall rents falling 0.6% compared to the previous quarter.

CBRE expected rents in core submarkets to weaken further in the second half of 2019, but office decentralization by companies will ensure rents in non-core submarkets increase 2-3%.

“High-value added service sectors, including banking and finance and professional services, which are highly sensitive to financial and asset market instability, will be especially vulnerable,” said CBRE in a report.

“As a result, occupiers, especially multi-nationals, are expected to remain cautious towards real estate expenditure in the short term, a trend that will cap expansion demand for office space.”

(Reporting by Clare Jim; editing by Uttaresh.V)

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