Kowloon office rents drop for fourth straight month in May

The average monthly rent was at HK$22.6 per sq ft.

The Kowloon office market saw an increase in leasing volume. According to Knight Frank, in May, new letting transactions increased about 23% MoM, as some companies resumed business activity after the Easter holiday in April. 

Here’s more from Knight Frank:

However, the transaction amount continued to be soft. In May, the average monthly rent dropped slightly to HK$22.6 per sq ft, marking the fourth consecutive month of declines. An increase in transaction volume combined with a decrease in transaction amount implies that the average size of deals were diminishing, hence indicating a further bottoming of the market. 

Landlords are waiting for more positive signals from sizeable tenants, as the market is still dominated by small transactions with an average size of 3,000 sq ft or below. Once the market sees more sizeable transactions with increased volume, rents and the total transaction amount are expected to rebound. 

In May, there was only one notable new letting case: AIA Insurance relocated from North Point to Airside in Kai Tak, occupying four floors, with 146,000 sq ft of office space. 

Looking ahead, whether the Kowloon office leasing market will bottom out and rebound soon still depends on how fast the supply surplus is absorbed. Stable rental growth of 0% to 2% is expected in the Kowloon market in 2024.