Billionaire Pares Real Estate Holdings With Sale of Hong Kong Skyscraper
https://www.caixinglobal.com/2017-11-02/101164723.html
The 317-room Grand View Hotel, formerly known as Newton Inn, in North Point, and the 300-room Rosedale Hotel in Causeway Bay are two such properties that could see their new owners turning them into office towers.
"Strong demand coupled with low vacancy in the CBD (central business district) has kept the office market robust and prices have reacted".
Office space in Hong Kong's Central now costs $306 per square foot per year, on average. That's 30 percent higher than the second highest area, London's West End, which came in at only $235 per square foot.
Over the past two years a rising number of large corporations have relocated to outer areas such as eastern Quarry Bay and Kowloon Bay, and across Victoria Harbour, where rent can be almost half the price.
Officials at ISS say around 40 per cent of their Hong Kong clients have moved from leasing several offices in Central, to one all-encompassing space in locations such as Quarry Bay, East Kowloon or Tung Chung
Prime office rents have increased by an average of about 6.5 per cent per year over the past three years, while rents in Central have grown by 9.5 per cent per year.
“As at the end of the second quarter this year, total occupancy costs for grade A office occupiers were 21 per cent and 54 per cent higher than those in Tokyo and Singapore respectively”.
Office space there now costs US$306 per square foot, 30 per cent higher than the second highest area, London’s West End at US$235 per square foot.
The tanking stock market, rising interest rates and the US-China trade war are all taking a toll on the confidence of financial firms, which make up the bulk of Central’s tenants.
It commands annual rent of US$307 per square foot, almost a third higher than the US$235 per square foot in London’s West End.
Financial tenants occupy 54 per cent of Grade A office space in Central.
Half of the new leasing deals in Central in 2017 were signed by mainland companies while so far this year they only accounted for 30 per cent.
By the end of the third quarter, Grade A offices in Central fetched HK$148.7 per square foot. Colliers expects that to inch up to HK$148.8 per square foot by the end of 2018, bringing the full-year increase to 9 per cent.
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