• Follow Us On : 

Greater Central Rents Record Largest Quarterly Drop in Seven Years Amid Weak dDemand

Redaksi | Kamis,03 Oktober 2019 - 14:20:33 WIB
Dibaca: 125 kali 
Greater Central Rents Record Largest Quarterly Drop in Seven Years Amid Weak dDemand
  • Greater Central rents fell 3.2% in Q3, the largest quarterly drop since 2012; Souring sentiment and weakening demand set to lead to a forecasted fall of 6% to 8% in 2019
  • Tourist arrival figures and retail sales in August plummeted, causing retail rents to fall across the board.

CHINA - 3 October 2019 - Grade A office rents in Greater Central softened significantly in Q3 against a backdrop of weak leasing demand in core areas and a continuing trend of MNCs relocating to non-core areas. A slew of pre-leasing transactions agreed well before the social unrest commenced, contributed to an overall positive absorption, but in general, tenants held off committing to relocations or expansion in the face of growing economic and social instability.

As a result, availability in Greater Central rose to 7.4% in Q3, the highest level in 14 years. While the negative impact has yet to fully trickle down into the office market, the retail leasing market is taking the immediate brunt following a severe drop in tourist arrivals.

Net absorption in the overall Grade A office market fell from 513,697 sq ft in Q2 to 295,214 sq ft in Q3. Most of the transactions were concentrated in non-core areas such as Hong Kong East, where in one of the largest examples, WPP leased 111,000 sq ft in K11 Atelier on King's Road. Whilst there were other significant leasing transactions in core areas, their average sq ft size was much less than witnessed in previous quarters.

Mr Keith Hemshall, Cushman & Wakefield's Executive Director, Head of Office Services, Hong Kong, commented, "While pre-leasing deals concluded well before June 2019 supported overall net positive absorption in the quarter, we have in fact witnessed a deterioration in market sentiment with many clients shelving relocation or expansion plans until the socio-economic situation improves. As a result, we expect demand to drop considerably in Q4 with net absorption for 2019 falling to less than half the level last year."

As occupier movements fell, demand weakened, and sentiment turned cautious, overall net effective office rentals dropped for the second consecutive quarter to HK$74.7 per sq ft per month (down 2.0% quarter-on-quarter). Led by a drop of 3.2% q-o-q in Greater Central, most sub-markets experienced rental declines in the quarter. The only exception was Hong Kong East where rentals edged slightly higher, by 0.3% q-o-q.

Mr John Siu, Cushman & Wakefield's Managing Director, Hong Kong, commented, "As sentiment in the office market has soured considerably in Q3 and with no end yet in sight to the current instability, rents across all sub-markets will come under increasing pressure over the remaining months of this year and into 2020. Our forecasts are for rents in Greater Central to fall by between 6% and 8% this year and by between 8% and 13% next year."

A summer of unrest has seen tourist arrivals to Hong Kong plummet, led by a drop in Mainland tourist volumes by 42.3% y-o-y in August. Retail sales took the brunt: Government figures showed the steepest decline on record by 23.0% y-o-y in August, led by a drop of 47.4% y-o-y in the jewelry & watches sector.

The traditionally strong medicines & cosmetics sector also recorded a drop of more than 30%.As sales dwindled, retail rents in both core and non-core areas declined in Q3, led by a 7.0% drop in Causeway Bay which has taken the hardest hit from the declining numbers of tourists and interruptions to business due to the social unrest. With tourist arrivals expected to remain muted in Q4, forecasts for rents in Causeway Bay in 2019 to fall between 11% and 13% for the year as a whole.

F&B spending also decreased: As of September (estimation), business for Chinese restaurants was down by 10-12% and non-Chinese restaurants down by 5-7%, while the fast food and drinks sector maintained a growth of 1-4%. Alongside the drop off in tourist arrivals, a fall in local consumption is also seen to be a contributing factor to the decline as many seek to avoid the unrest, particularly during evenings and on weekends. As in the case of high-street retail rents, F&B rents fell across all sub-markets, by between 3.0% and 4.1%, again with Causeway Bay suffering from the sharpest drop.

Mr Kevin Lam, Cushman & Wakefield's Executive Director, Head of Retail Services, Hong Kong, said, "It is a hard time for retailers and the dismal market sentiment will continue into the next quarter, as a solution to the current social quagmire is not yet in sight. However, trades that focus on mass market demand and local consumption should fare better, such as the sports/athleisure and education sectors, should fare better in the current environment. We are seeing a number of such retailers looking for opportunities to expand or seeking a better rental package amid the current market correction."

Akses Wahanariau.com Via Mobile m.Wahanariau.com
Untuk Berbagi Berita / Informasi / Peristiwa
Silahkan SMS ke nomor HP : 085271472010
atau email ke alamat : [email protected]
Harap camtumkan detail data diri Anda
Pengutipan Berita dan Foto, Cantumkan Wahanariau.com Sebagai Sumber Tanpa Penyingkatan
Rabu,28 Maret 2018 - 16:55:23 WIB

DHL eCommerce Partners with SE-ED Book Center to Provide Greater Choice and Convenience for Domestic Delivery within Thailand

• Expanded DHL ServicePoint model is now available in 150 SE-ED locations across Thailand, brin

Senin,15 Oktober 2018 - 00:03:36 WIB

Cushman & Wakefield Releases Research on Innovation and Technology Development and Property Opportunities in the Greater Bay Area

Development of Innovation & Technology in the Greater Bay Area Hinges on "Joint Forces

Rabu,20 Maret 2019 - 04:42:18 WIB

Arrow Electronics Helps Enterprises and Startups in China’s Greater Bay Area Boost AI and IoT Capabilities

Newly launched engineering and supply chain services making it more accessible for engineers and inn

Senin,25 Februari 2019 - 21:23:20 WIB

WeDoctor Greater Bay Area Healthcare Platform Officially Launches Foshan Base

CHINA - 25 February 2019 - The first innovative and integrated healthcare services pl

Sabtu,28 April 2018 - 05:20:34 WIB

Hong Kong Chief Executive Carrie Lam to Lead RICS Hong Kong Annual Conference 2018, ‘Establishing Hong Kong as The Nucleus of a Thriving Greater Bay Area’

HONG KONG, CHINA - Media OutReach - 27 April 2018 - RICS (Royal Institution of Charte

Jumat,04 Januari 2019 - 01:41:13 WIB

Vacancy Falls on Solid Absorption Cushman & Wakefield Releases the Report 2018 Greater China Top Office Demand Trends

HONG KONG, CHINA - Media OutReach - 3 January 2019 - Cushman & Wak

Senin,07 Oktober 2019 - 14:40:51 WIB

The First Global Tech-Innovation Summit on Art Finance was successfully held in Singapore

A gala for technology innovation A digital economy summit held to celebrate art A grand gathering of

Senin,07 Oktober 2019 - 14:36:38 WIB

Chairman of Asia Blockchain Industry Research Institute Mr. Chen Bohui Featured as Blockchain KOL by SunTV

CHINA - 7 October 2019 - Mr. Chen Bohui, Chairman of Asia Blockchain Industry Institu

Kamis,10 Oktober 2019 - 16:23:03 WIB

Ketua MPC Pemuda Pancasila Dumai Mendaftar ke PPP

DUMAI - Ketua Majelis Pimpinan Cabang (MPC) Pemuda Pancasila Kota Dumai, Abdul Kadir melalui tim pem