Hong Kong office rents are rising again, after a two year decline.
The rates – already the highest in the world – have experienced a 1.5 per cent growth in the second quarter of 2013, the first indication of rise in the district since 2011, according to Jones Lang LaSalle (JLL).
Gavin Morgan, head of leasing for JLL, said the fluctuation was largely due to the city’s strapped supply. Efforts to expand beyond the Central Business District into the harbour in Kowloon East and West Kowloon, have failed to match demand in the past. Vacancy rates are as low as 1.5 per cent in certain districts.
“With low vacancy and limited supply, as soon as there’s any uptake in activity, it’s going to positively reflect in the rents,” he said.
Rental has been undergoing something of a roller-coaster ride over the last few years, with rates falling after the global financial crisis, by as much as 35% in 2009. A rise in 2010 gave way to fall or growth by around 10% in the last two years, as weakness in the city’s IPO market weighed.
JLL have, however, warned against attempting to extrapolate too much from this recent rise.
“It’d be a wrong message to say that traditional big banks are expanding – they’re not,” said Gavin Morgan. “Maybe one or two have expanded a little, but it’s because of low vacancy that we’re seeing overall rents getting pushed into positive growth.”