HONG KONG: The amount of vacant top-tier office space has more than doubled in Hong Kong over the last three years as companies downsize operations, researchers have found, warning that demand could remain soft even if pandemic controls are lifted.
The data adds to warnings that Hong Kong’s lustre as a business hub has been dulled by political unrest and a subsequent crackdown. Pandemic curbs have also kept the city internationally isolated while rivals reopen.
Empty Grade A office space spiked from 4.2 million square feet to 9.6 million square feet (390,000 to 892,000 square metres) in the three years leading up to March, according to a report by real estate investment firm CBRE.
The jump came as a result of downsizing by nearly 950 companies, it said — a record high vacancy rate.
Occupancy fell by 2.3 million square feet in that same three-year period — sinking to 73 million square feet — making up Hong Kong’s “biggest and longest office market downcycle in history,” the report added.
Rents also dropped nearly 30 percent.
“The economic recession has prompted businesses to look at the office costs more carefully and reduce office footprint over the past few years,” said CBRE’s head of research Marcos Chan.
Hong Kong saw huge and sometimes violent democracy protests in 2019, which often spilled over into core business districts and helped tip the city briefly into a recession.
Beijing responded with a crackdown that has purged the city of dissent and transformed its once outspoken vibe.
Meanwhile throughout the pandemic Hong Kong has stuck to a version of Beijing’s zero-Covid strategy, quashing outbreaks with travel curbs, targeted lockdowns and stringent social distancing rules.
Hong Kong was kept largely virus-free until earlier this year when the highly transmissible Omicron variant tore through, killing over 9,000 people and leaving the city with one of the highest death rates per capita in the world.