Office rents in Hong Kong remained largely flat in 2014, although performance varied by sub-market. Office space of the type occupied by financial firms slid by 8% last year.
The financial services sector is pivotal to the Hong Kong office market, and occupier demand is currently coming primarily from mainland financial companies (rather than the multinationals), a trend compounded by existing occupiers expanding in-house rather than relocating.
Falling rents for financial office space were offset somewhat by a 5% growth in office rents for ‘creative’ space, reflecting the more domestic nature of that market.
Hong Kong’s importance to China’s capital markets was reaffirmed in November by the introduction of the Shanghai- Hong Kong Stock Connect, which allows investors to trade across the border for the first time. This has boosted confidence and should generate additional occupier demand from investment and securities firms from the mainland.
Meanwhile, the ‘Occupy Central’ protestors, which disbanded in December, appear not to have had any major lasting impact on demand in the office market sector.