• Office leasing momentum remained weak amid the ongoing U.S.-China trade conflict. Excluding pre-commitments to new supply completed this quarter, Q2 2019 saw just 12,000 sq. ft. of net absorption in the secondary market.
  • Subdued leasing demand ensured rents declined for the first time since Q2 2014. Overall rents fell by 0.6% q-o-q, led by the core markets of Greater Central and Wan Chai & Causeway Bay, where rents declined by 0.5% q-o-q and 0.6% q-o-q, respectively. Rents in the non-core markets of Hong Kong East and Kowloon East increased by 1.9% q-o-q and 1.0% q-o-q, respectively.
  • Leasing activity by agile space operators rebounded in Q2 2019. Apart from large operators displaying interest in non-Grade A buildings in core locations, several high-end newcomers opened their first centres in the city.
  • Rents in core submarkets are forecast to weaken in H2 2019. However, decentralisation will ensure rents in non-core submarkets increase by 2% to 3% by year-end.