Kowloon office rents to increase by up to 2% in 2024

The market is expected to continue to improve gradually this year. 

The Kowloon office market in Hong Kong has shown signs of gradual improvement in 2023. According to Knight Frank’s Steve Ng, Senior Director and Head of Kowloon Office Strategy & Solutions, new leasing cases of over 10,000 sq ft have recorded a 38% increase in volume compared to the Covid-19 period, approaching pre-pandemic levels. 

“Several factors contribute to this bottoming out: expansion of government and infrastructure-related organisations, opportunities arising from the Greater Bay Area development, tenants' “flight-to-quality” trend, and a continued focus on cost optimisation,” he added.

However, this demand is currently only able to support a bottoming out and has not yet led to a rebound. According to Ng, the presence of 7 million sq ft of vacant first-hand and second-hand office space in the Kowloon market continues to put pressure on landlords. In the face of competition, landlords are offering incentives such as fit-out subsidies, rent and management fee discounts, and flexible lease terms to stimulate market activity and attract tenants.

Looking ahead to 2024, the Kowloon office market anticipates a gradual improvement in sentiment, with overall rents expected to see a slight increase of 0-2%.