HSBC Research: Office rents are expected to decline by another 7% to 10% within the year
HSBC Global Research report indicates that Hong Kong office rents fell by 0.2% quarter-on-quarter in the first quarter, with the Central market declining by 0.7%. It is expected that overall rents will drop by another 7% to 10% this year. Despite an increase in tenant inquiries and lease renewals, the occupancy rate has slightly decreased. Nearly 6 million square feet of office space will be supplied in the next two years, posing challenges for the market. Some major landlords have adjusted their strategies to reduce reliance on the office market, and the performance of SWIREPROPERTIES and Hongkong Land may attract investor attention
HSBC Global Research published a report indicating that the first quarter office statistics from JLL show that overall office rents in Hong Kong have narrowed their quarterly decline to 0.2%, with Central's office market rents decreasing by 0.7% quarter-on-quarter. The bank noted an increase in tenant inquiries and lease renewals recently, but the overall occupancy rate has slightly declined. However, the biggest challenge for the office market is the nearly 6 million square feet of supply set to be launched in the next two years.
The bank maintains a cautious outlook on office rent prospects, expecting rents to decline by another 7% to 10% this year. In an optimistic scenario, the bank may see a slowdown in rent declines, with some signs of stabilization in the market within the year.
The report pointed out that against a challenging backdrop, some major landlords have made strategic adjustments to reduce their reliance on the office market through new profit growth drivers, which may surprise investors. SWIREPROPERTIES (1972) has seen improvements in its shopping mall business and short-term property sales, which should offset the pressure on office rents. Its repurchase plan and steadily increasing dividends are attractive to investors. Hongkong Land may receive a re-rating due to its asset cycle initiatives. Any plans to reduce its net asset value discount could act as a catalyst for its stock price. (Reporter Su Shang)
