Hong Kong has been losing foreign business liquidity as office vacancy soared amid the economic recession and ongoing Covid-19 uncertainties to a 15-year high, says real estate consultancy Cushman & Wakefield.
In a report this week, the multinational firm said office demand in the second quarter soured further in Hong Kong – at a net withdrawal of 513,510 square feet – even as a number of large Chinese companies expanded in the city. Of that office vacancy, foreign companies made up 61%, Bloomberg wrote, citing Cushman’s Tuesday media briefing.
Overall, Cushman & Wakefield (NYSE: CWK) said in its report, the availability reached 10.7% in the second quarter, with rental falling by 5.8% from the preceding trimester. “Among all districts, Greater Central saw the steepest rental contraction in the quarter, with average rentals in the submarket falling 7.5% q-o-q in an acceleration over a drop of 4.1% in Q1,” the report stated.
In the first quarter, the property agency said, similar footage of office space was vacated, of which 47% was formerly rented by foreign businesses. A combined 1.4 million square feet of offices have emptied over the past three quarters, according to the report.
The firm said, “As the COVID-19 outbreak continues to exert pressure on business performance, many firms will likely maintain a wait-and-see attitude towards business expansion plans, reducing office demand over the near-term. Some may also consider downsizing offices as they explore allowing staff to work from home or even reduce headcount to save overall operation costs.”
Cushman also said it expects the vacancy trend “persist into the second half of the year.”
Hong Kong’s GDP growth has dropped 8.9% year-over-year in the first quarter, ridden by the pandemic. The unemployment rate between March and May was at 5.9%, according to the Hong Kong Census and Statistics Department. The Composite Consumer Price Index rose 1.5% in May compared with a year ago.
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