HK - Commercial Properties & REITs

[winston]

Street shop rents could fall up to 20pc, warns CBRE

by Kevin Xu

Street shop rents in core retail districts in Hong Kong are estimated to plunge 15 to 20 percent this year, as there seems no end in sight to months of social unrest, combined with other economic and geopolitical uncertainties, said commercial real estate services and investment firm CBRE.

Lawrence Wan, senior director for advisory and transaction services in retail for CBRE Hong Kong, also expects vacancy rates in core retail areas to increase after the Lunar New Year.

Drug stores, jewelry and watch retailers will continue to reduce the number of unprofitable shops, Wan said.

CBRE also expects grade A office rents to drop by 5 to 10 percent this year.

Source: The Standard

http://www.thestandard.com.hk/section-n ... warns-CBRE

[winston]

HK office rents to slide by 14pc

Colliers International expects overall Grade A office rents in Hong Kong to fall by 14 percent in 2020, as economic growth and leasing momentum are projected to slow amid the coronavirus pandemic.

Although scheduled future Grade A office supply is limited, office leasing momentum will remain generally slow this year.

Occupiers are becoming more cost conscious, with some opting to downsize and explore cheaper office space, buildings and locations, Colliers said.

From a capital market perspective, there is hesitation from institutional investors as Hong Kong investment sales declined 58 percent quarter-on-quarter and 90 percent year-on-year to HK$3.4 billion in the first quarter.

Current market conditions are expected to persist throughout the year when property prices come under pressure across different sectors providing investors with opportunities.

Fiona Ngan, head of office services at Colliers, said well-established firms with stable capital flow could look to relocating into a traditionally competitive space in the CBD as growth in vacancy rates and greater rental corrections in 2020 provide more options.

Source: The Standard

https://www.thestandard.com.hk/breaking ... de-by-14pc

[winston]

Landlords in Central slash rents by more than a third as vacancy climbs to six year high

Source: SCMP

https://www.scmp.com/business/article/3 ... -high-amid

[behappyalways]

Hong Kong’s office market is hollowing out as vacancy rate hits 10-year high. Who can save the landlords?
https://www.scmp.com/business/companies ... ts-10-year

[winston]

Central vacancies hit 10-year high

by Winnie Lee

Office vacancy rates in Central rose to 8.5 percent, the highest since December 2009, according to CBRE, yet two mainland tech giants took up office space in Hong Kong, even though the pandemic has prompted some banks to consider scaling back in the world's most expensive office market.

CBRE estimates that nearly 1.1 million square meters of office space was given up by enterprises as of the end of May, an area equal to the total area HSBC's (0005) Hong Kong headquarters, HSBC Main Building.

Meanwhile, TikTok owner ByteDance took out a three-year lease on about 3,000 sq ft of space in Causeway Bay's Times Square and Alibaba (9988) signed up for one more floor spanning approximately 17,000 sq ft in the same building.

Alibaba currently leases three floors and a dozen more units.

Source: The Standard

https://www.thestandard.com.hk/section- ... -year-high

[winston]

Grade A office vacancy at 12-year high in Central triggering further rent slide

Alex Barnes, head of markets at JLL Hong Kong, says the increasing vacancy level continued to exert pressure on rents in Central.

Central’s Grade A office rents fell by 2.7 percent to HK$102.4 per square foot in May as the vacancy rate reached 5 percent for the first time since the Global Financial Crisis of 2008, a leading realtor said today.

The Jones Lang LaSalle Property Market Monitor reports that overall office rents dropped by 2.2 percent month-on-month in May. The sharpest decline was recorded in Tsim Sha Tsui and Kowloon East, where vacancies were the highest among the major office submarkets.

JLL’s research show that vacancy rates in Tsim Sha Tsui and Kowloon East increased to 6.5 percent and 13.7 percent respectively last month.

Alex Barnes, head of markets at JLL Hong Kong, said the increasing vacancy level continued to exert pressure on rents, "but the decline was milder than in previous months. Central’s Grade A office rents dropped by 2.7 percent month-on-month in May after it fell 4.5 percent month-on-month in April.”

“As uncertainties persisted and landlords became more willing to lower their rental expectations, tenants tended to renew their leases in order to save on capital expenditure,” he added.

JLL Greater China head of research, Nelson Wong, said that the overall Grade A office market, recorded a negative net take-up of 196,500 sq ft in May due to the slowing leasing demand. "In Central, the market recorded a negative absorption 115,600 sq ft, the highest monthly net withdrawal in more than one year.”

New lettings were mostly concentrated in premises outside of Central. Two finance firms have leased a total of 18,900 sq ft at Lee Garden Three in Causeway Bay as they sought for more cost effective options outside the traditional business districts.

Source: The Standard

https://www.thestandard.com.hk/breaking ... rent-slide

[winston]

Commercial rental declines accelerate in second quarter

Hong Kong’s rental declines accelerated in the second quarter in both the office and retail leasing markets, and overall availability of Grade A office space rising to 10.7 percent, the highest level in 15 years, indicating office rents will be under further pressure in the second half of the year, according to Cushman & Wakefield.

John Siu, Cushman & Wakefield's Managing Director, Hong Kong, expects overall availability to reach about 12 percent by the end of 2020, depressing overall grade A rents by another 8 percent in the second half of the year.

Greater Central rents are expected to decline by up to 20 percent for the full year.

On the retail side, a more stable retail leasing landscape in Tsim Sha Tsui helped boost the prospects there, which has overtaken Causeway Bay in terms of retail rents for the first time, Cushman & Wakefield said.

Rents in Causeway Bay continued to be heavily impacted by a struggling luxury sector. With the biggest quarterly drop among all submarkets, by 25 percent to HK$969 per sq ft per month, the current level represents a drop of 46 percent year-on-year and of 76 percent from the peak in fourth quarter 2013.

The decline also meant that Tsim Sha Tsui, with rents at HK$1,018 per sq ft per month, surpassed Causeway Bay as the most expensive retail district in Hong Kong for the first time.

Source: The Standard

https://www.thestandard.com.hk/breaking ... nd-quarter

[winston]

Street shop rents crash 80pc from 2016 peak

Street shop landlords in core business areas are slashing asking rents amid unprecedented social distancing measures, with the asking rent for a street shop in Causeway Bay plunging by about 80 percent from its peak in 2016.

The asking rent of a 1,130-sq-ft street shop on 482 Hennessy Road in Causeway Bay is currently about HK$120,000 per month, or HK$106 per sq ft, according to Centaline Commercial (Hong Kong). In comparison, its asking rent hit HK$600,000 per month four years ago.

Meanwhile, the asking rent of two street shop premises, which measure 750 sq ft in total, also plunged by about 48 percent to around HK$130,000 per month, from around HK$250,000 in June.

Short-term leases of street shops have become a new trend amid the Covid-19 pandemic, said Midland IC&I's (0459) chief executive Daniel Wong Hon-shing.

In a report this month, Midland IC&I expected shop vacancies in four core districts - Causeway Bay, Tsim Sha Tsui, Central and Mong Kok - to hit 15 percent in the third quarter.

In terms of rents, property consultant Colliers International forecasts that shop rents for tier-one streets in Hong Kong would slump 33 percent this year.

Shop vacancies in Tsim Sha Tsui surged 7.9 percentage points quarter-on-quarter to 11.9 percent in the second quarter, while the rate in Mong Kok rose 3.6 percentage points to 23.6 percent, said real estate services firm Cushman & Wakefield.

Source: The Standard

https://www.thestandard.com.hk/section- ... -2016-peak

[behappyalways]

Hong Kong retail stand-off turns nasty with landlords suing tenants to recover arrears as recession deepens
https://www.scmp.com/business/article/3 ... er-arrears

[winston]

Office rents sink further in HK

Hong Kong's overall office rents have fallen for six consecutive quarters.

Rents in Admiralty, Central and Sheung Wan, have fallen by 22 percent from the peak in the first quarter of 2019, Cushman & Wakefield reported.

The demand for offices in the third quarter hit the bottom on record, pulling net absorption from year to date down to negative 1.7 million square foot, equivalent to the space of one block of Two ifc.

The average rents are expected to fall by 16 percent to 21 percent this year.


John Siu, managing director, Hong Kong, said the vacancy rate will continue to rise in the next few quarters if the economy shrinks and the virus outbreak escalates.

In the retail rental market, rents continued to decline in the last quarter, though at a slower pace. Causeway Bay vacancy rate climbed to a record high.

Rents in Causeway Bay fell by 7.9 percent compared with the second quater. The vacancy rate was 13.2 percent.

In central, the rents fell by 7.8 percent, with 16.9 percent vacancy rate.

Kevin Lam, executive director and head of retail services, Hong Kong, said there will not a big fall for rents in Causeway Bay in the fourth quarter as the shop owners are not willing to cut prices.

Some short-term leases may pop up in the last quarter due to the holiday season.

Source: The Standard

https://www.thestandard.com.hk/breaking ... ther-in-HK