Mainland financial firms power Hong Kong office market's leasing demand

Taking advantage of the Mutual Fund Recognition Scheme.

According to Knight Frank's Asia Pacific Prime Office Rental Index, while a number of markets in the region are plagued by excess supply, sectors empowered by technology, such as online peer-to-peer financial services in Shanghai and e-commerce in India, are driving leasing demand.

Hong Kong and Taipei continued to enjoy moderate rental growth. Leasing demand in the former was generated by Mainland financial institutions, especially fund houses, taking advantage of the Mutual Fund Recognition Scheme implemented in May, while that in the latter was supported by foreign banks and high-technology firms.

Here's more from the index:

Sustained strong supply lifted the vacancy rate and lowered rents in Beijing further. Moving forward, a dearth of new completion in the second half of the year will give landlords a break.

The situation in Shanghai is just the opposite. No office space was added in the quarter, boosting the occupancy rate and rents. However, the market will be barraged by over one million sq m of planned new supply in H2 2015. Rents in Guangzhou will also experience downward pressure due to increased supply later this year.

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