Hong Kong draws 70% of Asia funds as office vacancy hits 31‑month low

This reverses last year's tilt towards Singapore. 

More than 70% of funds establishing an Asian presence have opted for Hong Kong, as demand from financial firms helped push Grade A office vacancy to a 31-month low.

The trend reverses last year's preference towards Singapore, where seven out of 10 chose the city-state compared with two in Hong Kong, said Sam Gourlay, head of office leasing advisory at JLL Hong Kong.

This comes as overall Grade A office vacancy rate fell to 12.8% at the end of July, matching its December 2023 level and marking the lowest rate in 31 months.

“We expect this demand to continue supporting the recovery of Central's Grade A office market,” Gourlay added.

Net absorption reached 313,000 square feet during July, with financial institutions, banks, and professional services firms accounting for much of the leasing demand.

Central recorded the biggest month-on-month decline amongst major office districts, with vacancy falling 0.8 percentage points to 8%. 

Tsimshatsui had a lower vacancy rate of 6.7%, whilst Wanchai/Causeway Bay stood at 9.8%, Hong Kong East at 13%, and Kowloon East at 19.8%.

Amongst the transactions recorded during the month, Ares Management Asia (Hong Kong) leased an additional 12,000 square feet at Gloucester Tower in Central, said JLL.

Office rents also rose in July, with overall rents growing 0.8% from June. Central posted a 1.5% increase, whilst Tsimshatsui gained 0.5%.

JLL put the average monthly Grade A office rent at $48.4 per square foot during the month.