Mainland firms retreated from the market.
The heated uptrend of Grade A office rents in Hong Kong which lasted 29 consecutive months finally came to a close after leasing costs dropped 0.2% MoM in November, according to real estate consultant Knight Frank.
In Central, rents declined 0.3% MoM, ending a freewheeling rally that lasted for nearly three years.
"The Grade-A office leasing market on Hong Kong Island remained subdued as uncertainties in the global economy loomed large," the firm said in a report.
Sentiment is also notably sluggish, noted Knight Frank, but given the traditionally slow season, there were no large leasing transactions in Central during the month as deals were largely in the 3,000 to 6,000 sq ft range.
There were also early signs of Mainland firms retreating were seen when a handful of small-sized office spaces rented by non-finance firms were surrendered. “Rents in Central will continue to be under pressure as leasing activity remain restrained. This is exacerbated by the growing sentiment amongst traditional tenants that decentralised areas should feature in their corporate planning.”
In Kowloon, the number of transactions in November still fell short of the average after falling to around 80 transactions compared to over 100 on average as trade war hit leasing activities. However, the headline figure still represents an MoM improvement as tenants from the IT and electronics sectors pushed demand slightly.
A number of significant leasing transactions, however, were recorded in November in Kowloon East. A new building in Kwun Tong called Neo slated for opening in 2019 had two floors go for a rent of $37 and $39 psf.
“The largely trade-related occupiers in Kowloon are watching the Sino-US negotiations closely but market outlook remains murky,” Knight Frank added.
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