More than a fifth of the respondents polled in Hong Kong said they would downsize their office space in the next two years and relocate elsewhere

Poll respondents cite cost cutting, shrinking business demand and work-from-home policy implementation as the reasons behind their choice

More than a fifth of office tenants in Hong Kong are likely to downsize their space in the next two years with some even looking to relocate to mainland China, Singapore and other parts of the world as they cut costs in a weak economic environment, according to a study released by an international property consultancy on Wednesday.

In a poll of 321 companies, the first since Hong Kong and mainland China scrapped all coronavirus pandemic curbs, 21 per cent or 69 of the respondents said they were likely to trim their operations, citing costs, shrinking business demand and further implementation of work-from-home policy as the top three reasons for their outlook.

“Some occupiers mentioned that their company’s capacity to relocate contributed to their decision,” the study by the property consultancy said. “Among all occupiers planning to downsize, 14 per cent cited relocating capacity to mainland China, 13 per cent to Singapore and 9 per cent to other parts of the world.”

“Businesses are motivated by optimising costs and adapting to changing market demands,” it added.

The poll was conducted from late June to early August and more than half the respondents were Hong Kong-based firms, 18 per cent from Europe and 11 per cent from other Asian cities.

Although 26 per cent of those polled said they would expand their office space and 53 per cent said they were likely to keep their current real estate requirements, the short-term outlook of those planning to leave could pile more pressure on a beleaguered property segment.

“While the majority of the occupiers intend to remain the same in terms of office size, the fact similar proportions of the respondents plan to expand or downsize reflects that the impact of the global economy on business operations and relocation needs vary across industries,” a property consultant said.

The vacancy rate in Hong Kong’s prime office space hit a record high of 15.1 per cent towards the end of August, according to the consultancy, beating the earlier peak of 13.1 per cent struck in September 2003.

Monthly office rental rates have declined 30.3 per cent to HK$54.70 (US$6.98) per square foot from the high struck in January 2019, when office vacancies were at a record low of 3.5 per cent, according to the consultancy.

More supply is scheduled to come on stream with about 3 million sq ft of new office space expected in the second half of the year, the consultancy said in a previous report.

Among the sectors, those in manufacturing, sourcing and trading, and shipping and logistics were the most pessimistic with about a third saying they were likely to reduce their office footprint.

Notably, the split in the real estate and construction sector between companies that said they would expand or reduce their office space was equal at 28 per cent, the study showed.

On the other hand, companies in the IT, banking, finance and insurance sectors were the most optimistic. About 56 per cent of those polled in the IT sector and 35 per cent in the banking, finance and insurance sectors said they were likely to add more office space.

“Respondents identified Hong Kong’s economic outlook (43 per cent) and a potential global recession (34 per cent) as the most important factors likely to impact their business over the next three years,” the study said. “Despite Hong Kong’s slower-than-expected recovery in the first half of 2023, business confidence is improving, with most respondents, especially those in banking and finance and professional services, optimistic about their business outlook over the three years, while 37 per cent of them believe their business will not change.”

The study recommended more flexibility from landlords such as shorter lease periods to adapt to the changing needs of their tenants.

“Supplementary incentives could include rent-free periods and contributions towards fit-out costs,” the consultancy said.

(South China Morning Post)

CWB store is rented for a song

A Causeway Bay store has been leased at rock-bottom rates last seen during the Covid pandemic.

The monthly rent of HK$180,000 is also 80 percent lower than peak rents seen at the same prime location.

The 1,325-square-foot rented store includes shops 1 and 2 on the ground floor of The Goldmark on Hennessy Road, near the Sogo department store.

The new tenant is a fashion shop, a real estate agent said. Though it is a short-term lease, the price is the same as the rent paid by a mask brand during the pandemic.

Lukfook Jewellery once paid as much as HK$3.5 million or HK$636 per sq ft to rent shops 1 to 7 at the building but the retailer vacated the premises during the pandemic. Thus, in terms of the price per sq ft, the new lease is about 80 percent lower than those peak levels.

In June, Chanel rented a shop at the adjacent at Capitol Centre for HK$3 million a month, or HK$158 per sq ft, which marked the largest commercial shop deal in Hong Kong in the past three years.

(The Standard)

Home completions dive 62pc

Private home completions slumped by 61.7 percent month-on-month in July to just 128 units, according to data from the Rating and Valuation Department.

It brings the total number of completions in the first seven months to 7,684 homes, which is about 38.5 percent of the government's full-year projection.

The downtrend was primarily due to the substantial inventory of unsold flats in new projects, prompting developers to slow the pace of completions in an effort to reduce unsold stock, a property agent said.

The agent noted that since March this year, monthly completions for new residential units have consistently remained in the low three-digit range, with May seeing a two-and-a-half-year low of just 86 units.

Furthermore, the scarcity of construction starts in 2020, totaling just 6,704 flats, has also contributed to the reduced number this year.

With only 7,684 homes built in the first seven months, the agent expects that it is unlikely that the annual target of 19,950 units will be reached.

The majority of the supply consists of small to medium-sized flats, with 4,352 units of 431 square feet or less completed this year, making up about 56.6 percent of the total supply.

In the primary market, Henderson Land (0012) posted the fourth price list for its Baker Circle Greenwich in Hung Hom, offering 28 flats at an average discounted price of around HK$19,038 per sq ft, the same as the third price list. Sales of these units start this Sunday.

In other news, a survey by an international property consultancy showed 56 percent of firms in the information technology sector expressed a strong interest in expanding their offices. Conversely, sectors such as manufacturing showed less interest in expansion, with 31 percent planning to downsize their offices.

(The Standard)

油塘項目建商廈規劃署不反對 金寶李秀恒：總投資逾20億 打造新地標

油塘灣「巨無霸」商住項目未來發展備受市場關注，其發展範圍內由金寶集團持有的榮山工業大廈，去年向城規會申請重建1幢樓高29層的商廈，可建總樓面約54.4萬方呎。最新獲規劃署原則上不反對，城規會將於明日舉行會議審議時料會「開綠燈」通過。該公司指，涉及總投資逾20億，以打造區內新地標。

規劃署指，擬建商廈與鄰近景觀等並非不相容，項目申請的建築物高度限制及地積比率並非不合理，故該署原則上不反對有關申請，而城規會將於明日舉行會議審議時料會「開綠燈」通過。

城規會料「開綠燈」

金寶集團主席李秀恒回覆本報查詢時指，該項目本來打算徹底翻新，改作商場、商廈及酒店綜合項目，最新決定拆卸重建，原因是工廈貼近海傍，因應政府要求，將騰出20米作為海濱長廊，地盤面積將由現時約5萬方呎，減至只有約4萬方呎，工廈現時樓高60米，重建後樓高約130米，以打造區內新地標。

他又稱，項目將重建商場、商廈及酒店綜合項目，惟暫未決定3者比例，視乎市況而定，初步估計每方呎建築費約4000元，總投資逾20億。

他續說，由於項目位處綜合發展區，未能享受工廈活化政策，另外，該項目早於2008年已向政府完成補地價程序，以作商業用途，當時每呎補價100元，涉及補價金額約5500多萬。

可建總樓面逾54.4萬呎

據城規會文件顯示，榮山工業大廈位於油塘海旁地段第73及74號，現時屬「綜合發展區」地帶，申請改劃為「商業 (1)」地帶及修訂「商業」地帶的《註釋》；地盤面積約49514方呎，以地積比11倍發展，擬建1幢樓高29層、包括1層防火層，另有5層地庫的商廈，涉及可建總樓面約544658方呎。

近年油塘區發展步伐加快，不少財團積極改劃區內項目發展，最矚目為恒基、新地及會德豐地產等六大發展商合作發展的油塘灣「巨無霸」商住項目，市場消息透露，政府早前第三度批出項目的補地價金額，平均每方呎樓面補價約6000元，涉及金額約245億，但因金額過高，發展商拒絕接納並提出上訴。

(星島日報)

救世軍購葵涌同珍工廈 一籃子物業作價1.22億

工廈受追捧，再有用家出手，慈善機構救世軍購入葵涌同珍工業大廈一籃子物業，作價1.22億，6年間升值約67%。

金朝陽沽貨 6年升值67%

金朝陽於今年5月放售葵涌同珍工業大廈一籃子物業，意向價約1.6億，平均呎價約4315元，上月由慈善機構救世軍以1.22億承接，較意向價減3800萬，平均呎價3290元。該物業位於昌榮路9至11號同珍工業大廈地下至3樓一籃子物業，建築面積合共約37081方呎，連約出售，新買家 THE GENERAL OF THE SALVATION ARMY，即是慈善機構救世軍。目前，救世軍使用同珍工業大廈上述的部分樓面，作為辦事處，今番由租客晉身業主。

金朝陽於2017年以7300萬買入上述同珍工業大廈一籃子物業帳面賺約4900萬，幅度67%。

工廈頻錄用家承接

近期工廈頻錄用家承接，其中，北角英皇道657至659號東祥工廠大廈，由大型出版商聯合出版集團購入9樓A及B室，作價3800萬，建築面積約7980方呎，平均呎價約4762元。聯合出版集團持有該廈4樓及7樓部分單位自用，是次增購9樓單位，料作為自用。原業主分別於1973年及1983年購入A室 (39萬) 及B室 (15.73萬)，合共54.73萬，帳面獲利3745.27萬，升值68.4倍。

(星島日報)