Hong Kong’s Grade A office market is about to embark on an unprecedented growth spurt. As it is today, JLL estimates that there is provision for at least 20 million sq ft of Grade A office supply to be delivered between 2015 and 2024, with a little over half of this supply coming from government land sales. At the end of this growth spurt, the market will look and behave fundamentally differently.
For occupiers, increased supply offers a myriad of opportunities to secure cost-effective offices to accommodate expansion and consolidation requirements, while the growth of the market will, for the first time, provide investors with the opportunity to acquire high quality assets in both core and emerging office locations. With the emergence of Kowloon East, rental markets will need to adjust accordingly. The days of HK$200 per sq ft monthly rentals in Central are unlikely to be coming back anytime soon.
JLL remains optimistic on the growth of the city’s office market, led by increasing demand from companies originating from mainland China. While vacancy currently remains tight across the market, with only a few Grade A office buildings, such as Citibank Plaza, having availability to accommodate larger office occupiers, the completion of new supply over the next 10 years will make Hong Kong more of a tenant’s market.