Grade A office

  • Weak leasing demand pushed up overall vacancy by a further 0.3pp q-o-q to 6.9% in Q4 2019, the highest year-end figure recorded since 2009. Rents declined by -3.5% y-o-y over the course of 2019 after an increase of 6.7% y-o-y in 2018.
  • Higher vacancy resulted in sharper rental declines in most submarkets. All key submarkets, except for Hong Kong East and Kowloon Others, registered negative rental growth for full-year 2019.
  • Leasing demand from Chinese companies and agile workplace operators was virtually non-existent in Q4 2019. Sources of demand included investment funds, medical centre operators and local insurance companies, all of which sought to capitalise on landlords’ less aggressive terms.
  • CBRE expects rents in core submarkets and Kowloon East to fall by 5% to 10% in 2020. Rents in Hong Kong East will be resilient in 2020 (up 0% to 5%) as decentralisation demand is set to hold firm.