Overall rents drop despite growth in some market: report

The overall net effective rents slipped by 0.2% month-on-month.

The overall net effective rents declined by 0.2% month-on-month despite rental growth recorded in some buildings, JLL reported.

This was also linked to the higher vacancy rate that led to downward pressure on rents, Alex Barnes, head of Leasing Agency at JLL in Hong Kong, said.

“Amongst the major office submarkets, Wanchai/Causeway Bay and Kowloon East experienced a relatively larger rental decline,” he said in a statement.

The vacancy rate in Central steadied at 7.4% as of end-July. Tsimshatsui and Kowloon East dropped to 10.8% from 11.2% and to 13.3% from 13.5%, respectively.

Meanwhile, vacancy rates in Wanchai/ Causeway Bay and Hong Kong East inched up to 9.8% from 9.4% and 6.6% from 6.5%, respectively.

Quality office buildings in the submarket have been met with greater occupier demand than the rest of the market, JLL reported.

Moreover, the net absorption in the overall office market decreased to -89,000 sq ft in July as corporate downsizing activities have abated recently.

The higher availability in the market offered more options to office tenants, some of whom took the opportunity to reconfigure their premises.