Increased commercial space in the core area

The Sino-US trade war has been repeated, and the latest round of tariffs has been imposed in September

The second round is also scheduled for December, and the economy continues to be unclear. In terms of internal worries, Hong Kong also faces major challenges. The protests triggered by the amendment of the Fugitive Offenders Ordinance have entered its third month. The situation has intensified and there is no sign of abating in the short term. The demonstrations were the first to bear the brunt of the impact on retail and shop. The Hong Kong Retail Management Association had earlier urged shop owners to reduce rents by half for a period of six months and to tide over the difficulties with tenants. The rating agency, Fitch Ratings, has lowered the credit rating of Hong Kong from “AA+" to “AA". The rating outlook is negative. It is the first time in 24 years that the agency has lowered Hong Kong’s rating. This has made Hong Kong worse. It is believed that the rent reduction will spread to office buildings. The market has already seen sporadic price reductions and release cases in individual commercial buildings and is expected to continue into the fourth quarter.

Expected to continue into the fourth quarter

In recent months, the market has successively recorded cases of office rent reductions, such as Room 08A, Middle Floor, Hopewell Centre, Wan Chai, with an area of ​​about 3,232 square feet. It was recently leased out with a lease of about $58, involving a monthly rent of about $187,000. According to the information, the old lease of the unit was about 60 yuan, which was about 3.3% lower than the new monthly rent. For the Central, the first floor of Room 1 to 02 of the Wing On Building, with a total area of ​​about 1,640 square feet, was recently leased at a monthly rent of about $82,000. The average rent was about $50. The old tenancy of the property was $51, a slight decrease of about 2%.

Another transaction is located in Wanchai District, 10th floor of the high-rise office building of the Convention and Exhibition Plaza. The area is about 1,463 square meters. Recently, the lease was about 55 yuan, which involved a monthly rent of about 80,000 yuan. The old rent of the unit was about 60 yuan per party. Compared with the new rent, the reduction is about 8%.

Bank of America Center reduced rent by 35%

At the same time, individual owners have confidence in the office market in Hong Kong, but understand that the recent business environment is difficult, so they have taken the initiative to significantly reduce the rent asking price, and hope to tide over the difficulties with the tenants. Located on the 35th floor of the Bank of America Center in Central, a sea view unit with an area of ​​approximately 1,023 square meters. Previously, the lease was priced at RMB 117 per square meter. The latest has been adjusted to approximately RMB 75, a decrease of approximately 35%.

The owners took the initiative to reduce rents, enhance their competitiveness, and attract high-quality tenants. The vacancy rate of the new buildings was also seen. According to the statistics of the Central Plains (Industry and Commerce), the latest vacancy rates in the core areas of Hong Kong Island increased from the beginning of the year, including gold. Central, the central part of the core, such as Zhong, Causeway Bay, Central, Wan Chai and Sheung Wan, the vacancy rate of Jiaxia in July was about 2.78%, which was about 0.48 percentage points higher than that in June.

Forming a financing platform to attract enterprises to settle in

The vacancy rate has risen, which proves that the increase in market rent supply has further pressured office rents. The owners will be able to rush out their flats in order to successfully lease out flats. The market is bound to continue to reduce rents. Fortunately, I believe that the market will take a while to digest the commercial buildings for rent, and the market will only set. However, in the context of the new economy, Hong Kong has the opportunity to become a globally attractive financing platform, attracting companies listed in the “Belt and Road” region to be listed in Hong Kong. The listing of emerging and innovative industrial companies in Hong Kong will account for the proportion of Hong Kong IPO funds raised. The continued expansion will help strengthen the status of Hong Kong’s financial centres. Together with Hong Kong’s advantages of low interest rates and low taxation, as well as Hong Kong’s important footsteps for foreign and Mainland enterprises, Hong Kong will continue to be a place where domestic and foreign companies are competing. As long as the hard time passes, the commercial market in Hong Kong will continue to recover.

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