Guess which district hit the highest Grade A office space price hike

Prices edged up by 2.3%.

Boosted by the record-breaking sale of East Tower, One Bay East, the Kowloon office market continued to revive with a number of strata sales completed in newly launched buildings.

According to a research report from Savills, most of these units were transferred from the hands of investors to end users, usually with the investors making a 10% to 15% profit.

Floors of Rykadan Capital Tower were first sold in 2012 with average prices ranging from HK$8,000 to HK$9,000 per sq ft, mainly to investors, and when these floors were resold to end users in 2013/2014, average prices increased to around HK$9,000 to HK$10,000 per sq ft.

Many of these purchasers were occupants in either offices or industrial buildings and were buying to upgrade their places of business or to stabilise occupation costs in the long run.

Grade A offi ce prices in Kowloon East rose by 2.3% as a result, the highest across all districts.

Here’s more from Savills:

Elsewehere, in Tsim Sha Tsui, volumes remained thin as vendors held out with high asking prices, but there were still end users looking for suitable space for long-term occupation.

A tenant in East Ocean Centre bought a whole floor (11,475 sq ft) for HK$128.8 million (HK$11,224 per sq ft), looking to stabilize their occupation costs and yet remain at a place familiar to their employees and clients.

Hong Kong Island. Contrary to the active Kowloon market, the Hong Kong Island Grade A office market was more subdued with very few deals done above the HK$50 million mark.

While vendors were as firm on asking prices as their Kowloon counterparts, very few end users were willing to match these prices, particularly in the Central/Admiralty area where stratified landlords were reducing rents by up to 10% (compared with the previous lease terms) given drifting Central market rents.

Many occupants chose to renew their leases for another two to three years before making any buying decisions.

The only active buying group in the Hong Kong Island market was, as expected, mainland companies, which were looking for good quality, whole-fl oor Grade A/B premises in Admiralty/Wanchai, preferably with sea views.

A high floor (7,388 sq ft) with full sea views in the Sun’s Group Centre in Wanchai was sold

to a mainland company for HK$133 million (HK$18,000 per sq ft).

While mainland companies remained in the spotlight of the otherwise quiet office market on Hong Kong Island, deals involving them normally take much longer to complete as they are required to report offers/counteroffers to headquarters on the mainland for internal approval, which usually takes a few months.