• 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: 472 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
Jumat,13 Desember 2019

Cushman & Wakefield Announces Strategic Partnership with Vanke Service to Create New Asset Services Company in Greater China

CHINA - 12 December 2019 - Cushman & Wakefield (NYSE: CWK), a leading global real estate service

Sabtu,22 Desember 2018

Club Med Launches ''Amazing Family'' Program Across Greater China

SHANGHAI, CHINA - Media OutReach - 21 December 2018 - After successfully launchi

Kamis,06 Juni 2019

Greater Bay Area Initiative to Propel Real Estate Investment into Guangzhou and Shenzhen to New Highs

A strong pick-up in investment interest in the GBA with interest narrowly focusing in Guangzhou an

Jumat,02 November 2018

WeDoctor Announces the Greater Bay Area Healthcare Platform Creates 90-Minute Greater Bay Area Healthcare Circle

HONG KONG, CHINA - Media OutReach - 2 November 2018 - We Doctor Holdings Limited

Sabtu,04 Juli 2020

9 in 10 Employees Say Lack in Data Skills Lead to Greater Challenges at Work, May Be Career Development Roadblock

92% admit to not achieving optimal productivity due to a lack of data skills 89% say that they fa

Selasa,10 Maret 2020

Infor Appoints Boon Khoo to Lead Greater China and Korea Region

Khoo will be responsible for overall business and customer growth in the region CHINA - Media OutRe

Jumat,18 September 2020

VOLUNTARY ANNOUNCEMENT: Uni-GLP Development in Treatment of COVID-19 and Other Indications

CHINA - EQS Newswire - 18 September 2020 - The board of directors (the "Board") of Uni-Bio

Jumat,18 September 2020

Citi Steps Up Its Commitment to Youth Employment, Skills Development and Innovation Across Asia Pacific

As part of the expanded global Pathways to Progress initiative, Citi and the Citi Founda

Jumat,18 September 2020

Infinix Partners with Sally Karagon a Renowned Fashion Icon on Zero 8 Launch in the Kenyan Market

KENYA - Media OutReach - 18 September 2020 - Infinix, a global leader in consumer electronics market