Grade A office rents on Hong Kong Island to strongly rise in 2015

Robust demand likely to spur the hike.

For Hong Kong's prime office market in February, only a few major office sales transactions were recorded, but there were signs of a return of investors to the market.

According to a research note from Knight Frank, a major deal involved a high floor unit in World-Wide House in Central, which was reportedly sold for HK$30,260 per sq ft--the second highest price ever achieved for an office unit in Hong Kong.

Grade-A office prices in major business districts have seen notable growth since the end of 2014. Rent growth is expected to support capital appreciation and we expect investors to continue to increase their focus on the office sales market this year.

Here's more from Knight Frank:

In the office leasing market, divergent trends have been witnessed among various industries. On the one hand, finance, insurance and medical beauty companies continue to expand--in the form of both in-house expansion and the taking-up of space in other buildings--driving up office demand.

However, sourcing and logistic firms--facing intense competition from neighbouring cities such as Shanghai and Singapore--are preferring to relocate to save on rental costs.

Looking ahead, we believe Grade-A office rents on Hong Kong Island will continue to increase in 2015, mainly driven by strong demand from companies looking to expand in these areas with limited new supply and where vacancy rates will remain low.