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Tag: office space

  • Kowloon Office Rental Market Set for 9% to 11% Decline in 2023: What’s Driving the Shift?

    Kowloon Office Rental Market Set for 9% to 11% Decline in 2023: What’s Driving the Shift?

    As the office market in Kowloon grapples with a substantial oversupply, the atmosphere has become increasingly cautious among tenants. Steve Ng, Executive Director and Head of Kowloon Office Strategy & Solutions at Knight Frank, pointed out that the first half of the year has been particularly challenging, with more than 6.7 million square feet of new and existing inventory flooding the market.

    Stagnation Reigns in Kowloon

    “Demand remains scattered, with only a handful of significant transactions occurring,” Ng remarked, highlighting a widespread sentiment of hesitation among tenants opting for a “wait-and-see” approach. As a result, the marketplace appears stagnant, with little sign of a turnaround.

    Declining Rents and Rising Vacancies

    In June 2025, Kowloon office rents experienced a year-on-year decline of 3.6%, dropping to less than HK$1 per square foot. This figure hints at a broader trend of weakness within the market. The office vacancy rate has increased modestly by 1.2%, affirming a lack of confidence in a potential recovery. Tenant sentiments reveal a prevailing wariness and anticipation of further drops, signaling that any signs of recovery might still be far off.

    Trade Pressures Loom Large

    Many tenants in Kowloon are entrenched in supply chain industries such as manufacturing, trading, and logistics. Despite a temporary pause in the US tariff conflict, ongoing trade pressures continue to rattle these sectors, leading to sustained weak demand for office space. With an oversupply that shows no signs of abating, we project a further decline in office rents in Kowloon, expecting a drop of 9% to 11% in 2025. Perhaps it’s time to think about converting those empty spaces into trendy pop-up shops or art galleries—there’s always a silver lining!

    Questions & Answers

    What challenges is the Kowloon office market currently facing?
    The market is dealing with an oversupply of over 6.7 million square feet and weak tenant demand, leading to a stagnant atmosphere and only a few significant transactions.

    How much have Kowloon office rents declined?
    As of June 2025, rents have fallen by 3.6% year on year, landing at less than HK$1 per square foot.

    What factors contribute to the expected rent decline in Kowloon?
    The combination of a supply glut and ongoing trade pressures in key industries will likely result in a projected rent drop of 9% to 11% by 2025.

  • The most expensive place to rent an office in the world

    The most expensive place to rent an office in the world

    Central, Hong Kong’s frenetic business and retail heart, crammed with skyscrapers, swanky malls and luxury hotels, is the most expensive district for renting office around the world. Although the office rent in Hong Kong’s Central district is already the world’s most expensive, and there are more and more companies moving out of the city centre to cheaper locations, prices are likely to remain sky high, or even higher.

    Hong Kong is the key financial centre in Asia, and Central is still the most important financial district in the city. Thus, the office rent in Central district is predicted to increase continuously.

    According to Raymond Chow, the Executive Director for Commercial Property at Hongkong Land, Central’s largest office landlord, “Central is still the home to the city’s most influential institutions, such as the Securities and Futures Commission, The Stock Exchange of Hong Kong and Hong Kong Monetary Authority, the connectivity of Central remains a magnet for leading players” he added,  “It is in a way that other districts cannot compare.”

    In June 2018, Central was ranked the most expensive office location in the world for the third year by global commercial real estate firm CBRE, thanks to the strong demand from mainland tenants, who would like to expand their business outside China and seeking Grade A office space.

    Office space in Central now costs USD $306 per square foot, 30 per cent higher than the second highest area, London’s West End, at US$235 per square foot.

    Of the top 10 most expensive premium rental locations, six were in Asia, including Shenzhen, Beijing, Tokyo, and Delhi.

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  • Vietnam office space remains lucrative

    Vietnam office space remains lucrative

    Hanoi and HCMC will continue to be among the best performing office space markets globally in 2019, top property consultants have predicted. Troy Griffiths, deputy managing director of real estate service firm Savills, said that it was the case last year and this would continue on the back of very strong demand amidst supply constraints.

    “The demand driver is very strong, especially that from the booming financial services sectors like insurance and banking.”

    He said rentals would rise across the board as a consequence.

    “The Hanoi market’s rental might grow somewhere between 7 to 15 percent across all grades this year, while it will probably be slightly lower in HCMC, at 11 percent for A grade.

    “Rental will continue to trend up until supply catches up. Occupancy will be very strong at 90 percent and above. This will be much a story for 2019.”

    Official statistics show that at more than $19 billion, foreign direct investment (FDI) disbursement for 2018 in Vietnam was the highest in a decade.

    The country’s commitment in free trade agreements (FTAs) including the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), which came into force on January 14, 2019, is also expected to boost economic prospects, resulting in a positive demand in office market.

    Dung Duong, head of valuation, research and consulting at CBRE, also said Hanoi and HCMC will continue to be two of the world’s the best performing office space markets this year.

    “Grade A average asking rent in HCMC is expected to increase by 4 percent in 2019, while occupancy will reach as high as 96 percent.”

    In Hanoi market, positive rental growth is expected in both Grade A and B, especially in Grade A on the back of new quality supply in the central business districts (CBD) in 2019, she said.

    “This will become the newest Grade A supply after three years of no new supply. In terms of demand, apart from traditional sectors such as banking, insurance, manufacturing and IT, co-working space is expected to continue to be a major source of demand.”

    According to a recent report by another real estate services provider, JLL, the HCMC market added 60,269  square meters of new supply from two grade B and four grade C buildings in 2018, taking the total inventory to nearly 1.97 million sq.m.

    The robust demand had pushed the occupancy rate to more than 96 percent by the end of last year, the report said.

    “Technology, IT companies and flexible space operators continued to show signs of expansion, while tenants in services, finance and manufacturing continued to dominate leasing demand in the market.”

    Average rent was $23.6 per square meter per month, up 4 percent from the previous year.

    There was no new grade A supply last year and only one new grade A building will be added this year, the Lim Tower 3 in Nguyen Dinh Chieu Street, District 1.

    In Hanoi, given the buoyant Grade A demand and limited premium supply, some buildings in the CBD with high occupancy rates continued to increase rents in the fourth quarter of 2018.

    Thai Square fronting two streets in the capital’s Hoan Kiem District, Tong Dan and Tran Quang Khai, is expected to come into the market in the first quarter of 2019, adding more than 25,000 sq.m to the inventory.

    By the end of 2019 some 153,000 sq.m of space is expected to be added in Hanoi, the report said.

    While the opportunities in office investment in the HCMC and Hanoi CBDs are obvious, Griffiths said foreign investors interested in them would find a lot of challenges.

    “The reality is that land in CBDs in HCMC and Hanoi have a great deal of domestic ownership.”

    He advised foreign investors to seek good long-term joint venture partnerships.

    “There are more and more domestic real estate companies listed on local bourses and they are very active in the property market. That gives an opportunity for greater liquidity and great foreign ownership. I think it’s pretty essential for foreign investors to have good joint venture partnerships with such firms.”

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  • Malaysian office space to remain vibrant despite influx of new supply

    Malaysian office space to remain vibrant despite influx of new supply

    The Klang Valley office market is expected to remain vibrant this year, despite the influx of new buildings which is expected to affect occupancy rates, said Knight Frank Malaysia. “Due to the influx of new buildings, particularly in TRX, occupancy rate in Kuala Lumpur city is expected to decline marginally. However, rental rates will continue to hold steady as newer buildings tend to command higher rental rates,” it said in its Real Estate Highlights 2nd Half 2018 report.

    The report highlighted the trend of co-working and shared services as a sweet spot in the challenging office market environment.

    Labelled “space as a service”, the rising popularity of this market segment is demand driven by freelancers, start-ups and small and medium sized entrepreneurs. Knight Frank expects to see active take-up by co-working, shared services and IT related industries this year.

    “Moving into 2019, occupancies in selected sub-office office markets are expected to be under pressure due to heightened competition from impending and existing office stock while rentals will continue to hold steady as newer buildings tend to command higher rates.

    “We continue to observe active enquiries and leasing activities in the co-working and IT related segments. Also, an increasing number of older buildings are looking into repositioning and refurbishment to meet current occupier needs,” said Knight Frank Malaysia executive director of corporate services Teh Young Khean.

    Dated but well located office buildings such as Menara Weld, Menara Standard Chartered, Menara Maxis and Menara Milenium will reportedly be undergoing repositioning/upgrading works to improve their market competitiveness in terms of rental and occupancy levels.

    Knight Frank noted that the new government’s concerted efforts to implement numerous regulatory reforms will augur well for the business operating environment and this is expected to be positive for the country’s economic and property market performance over the longer term.

    Looking back at 2H2018, the cumulative supply of purpose-built office space in Kuala Lumpur and Selangor stood at 103.17 million sq ft following the completion of six buildings with a combined space of 1.84 million sq ft.

    In 1H2019, office buildings slated for completion include The Exchange 106, Menara Prudential, Menara Star 2, 1Powerhouse and Symphony Square.

    Overall occupancy rate for Kuala Lumpur city was about 78.7% in 2H2018 compared with 79% in 1H2018. The overall occupancy rate for decentralised office locations in Kuala Lumpur fringe fell to 82.2% from 83.8% during the same period.

    In Selangor, overall occupancy was slightly lower at 78.3% in 2H2018 compared with 79.2% in 1H2018.

    The average rentals in Kuala Lumpur fringe and Selangor rose marginally in 2H2018 to RM5.75 psf and RM4.22 psf respectively compared with RM5.72 psf and RM4.20 psf respectively in 1H2018.

    However, average rental in Kuala Lumpur city remained flat at RM7.15 psf as owners and landlords of newer office buildings offered competitive rental and attractive tenancy terms to improve take-up.

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  • Real estate in Saigon the most sought after in Vietnam

    Real estate in Saigon the most sought after in Vietnam

    Saigon leads Vietnam in real estate interest, drawing 300 million internet searches in the last 12 months. According to a report recently issued by Batdongsan.com.vn, one of the biggest property portals in Vietnam, Hanoi is the second most searched city when users look up real estate at 170 million searches.

    The two cities are followed by central Da Nang City, southern Bien Hoa Town, northern Hai Phong City, central Nha Trang Town, and Vung Tau Town and Can Tho City in the south in terms of popularity.

    Overall, the leading position of Saigon real estate is predicted to continue to remain the same because its housing market is still seeing a lot of actions.

    Consumer data collected from Internet queries also showed the level of interest given to real estate in each specific area.

    Saigon attracted the highest level of interest, at 41.8 percent of recorded consumers, the largest in Vietnam, while Hanoi had 29.7 percent. Central Khanh Hoa Province, Da Nang, and southern provinces of Dong Nai and Binh Duong recorded modest numbers, fluctuating between 3 to 4.5 percent. Interest is measured by saved searches, favorites and number of queries.

    The report also reveals that budget and midrange apartments in Saigon and Hanoi, which are priced between VND20-30 million ($860.47 – $1,290) per square meter, with an area of around 60-70 square meters are the type of high-rise apartments that attracts the most attention from Internet users.

    Meanwhile, in regards to content posted on the website of this organisation, foundation land (land serving as the foundation for housing projects to be built on) tops the board in the number of posts published, at 1.2 million posts.

    The land is also the most indulgent hunting with nearly 120 million searches, showing the habit of clinging to land, ownership of real estate in the territory of the Vietnamese, said the report.

    In addition, separate houses attached to land are also highly sought after, at nearly 120 million searchers. This shows the Vietnamese consumers’ preference to own land, or possess properties attached to land, according to the report.

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  • HCMC a top 20 Asia Pacific office rental market

    HCMC a top 20 Asia Pacific office rental market

    With office rents rising constantly for several years, HCMC has moved into the top 20 Asia-Pacific office rent markets. Grade-A office rents in Ho Chi Minh City have reached a five-year peak of $936 per square meter a year, according to property service firm JLL. The HCMC market has come under the spotlight in a premium office rent report for the Asia-Pacific region just released by the US-based global company.

    The report said that HCMC, an emerging market, saw annual gross premium office rents rising to $635 per square meter, a year-on-year increase of nearly seven percent, placing the city in the list of top 20 office rent markets in the Asia-Pacific region.

    It highlighted the case one unnamed building in the inner city, where a record rent level of $936 per square meter a year was registered, a peak unseen for many years.

    JLL assumes that the HCMC office market is heating up with increasing investment inflow from many multinational firms.

    The US firm added that the total supply of office space in HCMC has increased to two million square meters, a five-fold hike compared to Bangkok. The scarcity of premium office space in HCMC has constantly pushed up rents.

    Financial corporations are willing to pay for high-end office space in HCMC, while banking and financial firms were keen on premium office space, topping the list of 72 key tenant categories.

    Meanwhile, JLL said in the Global Premium Office Rent Tracker Q4 2018 that Ho Chi Minh City and Manila, the two more affordable cities in Southeast Asia, are attracting significant corporate interest, along with European cities like Amsterdam, Berlin and Warsaw.

    The firm said that growth in occupation costs is likely to slow down in 2019 as new supply comes through; however, while rental growth is expected to decelerate, there are very few major markets where a downward correction is projected for 2019. In fact, the delivery of new premium buildings will set fresh rental benchmarks in several markets, it predicts.

    Total occupancy costs are calculated by combining the net effective rent with additional costs, including service charges and taxes.

    JLL’s Global Premium Office Rent Tracker 2018 compares occupancy costs for premium office buildings across the world’s leading real estate markets. This fourth edition includes 72 office submarkets across 61 cities.

    The report includes the key elements of occupancy costs – net effective rent, service charges and government tax on rent – all standardized to enable true international comparisons.

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  • HCMC office rents soar to five-year high

    HCMC office rents soar to five-year high

    High-rise buildings in downtown HCMC have seen monthly rents rocket to $70 per square meter, the highest in five years.

    A report on the Ho Chi Minh City office market in the third quarter of 2018 said the main reason for rising prices is that office supply is not able to meet current demand.

    The report, prepared by real estate service firm Jones Lang LaSalle (JLL) Vietnam, noted that in the past three months, the average gross rent of Grade A office towers rose to about $50/sq.m per month, up by nearly 7 percent over the same period last year.

    However, the highest gross rents of towers in prime locations in HCMC soared even higher to $70/sq.m per month. This marks a record high for nearly half a decade.

    Similarly, rents for Grade B rental properties located in Districts 1 and 3 of the city have surged over the $30/sq.m per month threshold.

    Rental office space occupancy rates for Grade A properties are now over 95 percent while Grade B offices have been filled up 96.5 percent.

    Office occupancy has accelerated as a result of the boom in information technology, e-commerce and co-working space industries. The demand for HCMC office space could increase by 10 percent every year for the next 10 years, according to JLL Vietnam.

    As of the third quarter of 2018, the total office space for lease in HCMC was approximately two million square meters: Grade A buildings totaled 250,000 square meters; Grade B, 900,000 square meters; and Grade C, about 810,000 square meters.

    The JLL report also forecasts that in the next three months, office rents in HCMC will continue to rise quickly due to the lack of new premises to meet the huge demand.

    Grade A and B office space will continue to be in short supply in the fourth quarter of 2018, as the next 11 buildings planned are only to be completed by 2019-2020 at the earliest, it said.

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  • Rentals rise in downtown Saigon as supply stagnates

    Rentals rise in downtown Saigon as supply stagnates

    Office rentals in downtown Ho Chi Minh City have been rising steadily over the last three months, a new report says.

    Grade A office rent has seen a 7 percent increase in the second quarter over the first quarter and 17 percent increase over the same period last year, the report said.

    A similar increase, of 7.3 percent over last year, has also been seen in Grade B office rentals.

    The report attributes the rice in prices to high demand and limited supply.

    In the last one year, office vacancies in new buildings have been rapidly filled, with vacancy rates for both Grade A and B offices at below 5 percent, the report says.

    In the second quarter of 2018, the HCMC market has not received new office space supply. Total Grade A office supply remained unchanged at 382,763 square meters, while Grade B office space rose slightly by 968 square meters to 814,330 square meters.

    Dang Phuong Hang, managing director of CBRE Vietnam, predicted that Grade A office rents would continue to increase through 2019 or early 2020, with supply remaining limited. Office vacancies will become increasingly scarce, she said.

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  • CBRE: Hong Kong becomes the world’s highest-priced office market

    CBRE: Hong Kong becomes the world’s highest-priced office market

    Hong Kong’s (Central) overall prime occupancy costs of US$290 per sq. ft. per year topped the “most expensive” list, displacing London’s West End (US$262 per sq. ft.). Beijing (Finance Street) (US$188 per sq. ft.), Beijing (Central Business District (CBD)) (US$182 per sq. ft.) and Hong Kong (West Kowloon) (US$179 per sq. ft.) rounded out the top five.

    The study also found that the real estate recovery in Ireland continued to gain momentum, with Dublin, which experienced a 50 percent drop in rents during the downturn, showing the second-largest year-over-year prime occupancy cost increase among the 126 cities surveyed (up 16.6 percent year-over-year)—second only to Hong Kong West Kowloon (up 19.5 percent year-over-year). In North America, real estate fundamentals saw steady improvement with both Atlanta (Downtown) and Seattle (Downtown) among the 10 markets with the fastest growing prime occupancy costs.

    Global prime office occupancy costs—which reflect rent, plus local taxes and service charges for the highest-quality, “prime” office properties—rose 2.4 percent year-over-year, with the Americas up 2.3 percent, EMEA up 2.1 percent and Asia Pacific up 2.7 percent.

    “We expect the global economy to keep growing, and the global service sector, the primary occupier of prime office properties, will continue to expand through periods of volatility, “ said Richard Barkham, global chief economist, CBRE. “Since inflation is low, the growth in prime office occupancy costs is significant for both users and investors.”

    CBRE tracks occupancy costs for prime office space in 126 markets around the globe. Of the top 50 “most expensive” markets, 20 were in Asia Pacific, 20 were in EMEA and 10 were in the Americas.

    Europe Middle East & Africa (EMEA)
    Europe is benefitting from a cyclical pick-up in consumer spending and business investment, as well as a very competitive currency and intense monetary stimulus, which helped to make Dublin, Stockholm and Barcelona the fastest-growing markets in the region. Most Central and Eastern European markets were down year-over-year, including Moscow, which is still in the midst of a recession. Costs accelerated quickly in South Africa, with Johannesburg, Cape Town and Durban all seeing increases of at least 6.9 percent from year-ago levels.

    Only 11 out of 56 EMEA markets recorded a year-over-year decline in prime office occupancy costs.

    In addition to London West End, the other market from the region in the global top 10 was London City (US$145 per sq. ft.).

    Asia Pacific
    Asia Pacific was home to seven of the top 10 most expensive markets—Hong Kong (Central), Beijing (Finance Street), Beijing (CBD), Hong Kong (West Kowloon), Tokyo (Marunouchi/Otemachi), New Delhi (Connaught Place – CBD), and Shanghai (Pudong).

    The service sector will show particularly strong growth in Asia as pensions and insurance products gain market share. So occupancy cost growth will continue to trend upwards at a moderate pace.

    Hong Kong (Central) is the only market in the world—other than London’s West End—with a prime occupancy cost exceeding US$200 per sq. ft. Hong Kong Central’s double-digit growth in occupancy costs was fuelled by two factors: an ultra-low vacancy rate due to lack of new development and continued demand for high-quality space in prime locations by mainland Chinese companies.

    The most expensive market in the global ranking from the Pacific Region was Sydney (US$93 per sq. ft.), in 22nd place.

    A few key Southeast Asian markets registered decreases, including Singapore and Jakarta.

    Americas
    In the Americas, four markets—Monterrey, Atlanta (Downtown), Seattle (Downtown) and Atlanta (Suburban)—recorded double-digit percentage gains year-over-year.

    New York Midtown, number nine on the global list, remained the most expensive market in the Americas, with a prime office occupancy cost of US$137 per sq. ft.

    Several energy-centric markets experienced material drops in occupancy costs, including Calgary (Downtown and Suburban), Houston (Suburban) and Denver (Suburban).

    In the U.S., economic growth is expected to pick up in the next several quarters following a turbulent opening quarter. Overall, occupier activity sustained last year’s momentum, leading to an increase in occupancy costs in 17 out of 22 U.S. markets covered in this survey.

    Mexico City remained the most expensive market in Latin America, posting an office occupancy cost of US$65 per sq. ft. and ranking as the 39th most expensive market globally. Both Brazilian markets, Rio de Janeiro and São Paulo, saw declines.

    Microsoft Word - Press release - POOC June 2016_FINAL.docx
    Note: The full Top 50 Most Expensive Markets chart is located at the end of this press release.

    Notes

    1. The Global Prime Office Occupancy Costs report is a survey of office occupancy costs for prime office space in 126 cities worldwide.
    2. The latest survey provides data on office rents and occupancy costs as of March 31, 2016.
    3. The Largest Annual Changes rankings are based upon occupancy costs in local currency and measure. The Most Expensive ranking is based upon occupancy costs in US$ per sq. ft. per annum.
    4. The figures given in this release refer to occupancy cost. This represents rent, plus local taxes and service charges. The occupation cost figures have also been adjusted to reflect different measurement practices from market to market.
    5. Due to methodology changes, comparisons with figures in previously released reports are not valid.
    6. To obtain a full copy of the report or to arrange to speak with a CBRE expert, please contact Robert McGrath ([email protected]).

    Microsoft Word - Press release - POOC June 2016_FINAL.docx

    About CBRE Group, Inc.
    CBRE Group, Inc. (NYSE:CBG), a Fortune 500 and S&P 500 company headquartered in Los Angeles, is the world’s largest commercial real estate services and investment firm (in terms of 2015 revenue). The Company has more than 70,000 employees (excluding affiliates), and serves real estate owners, investors and occupiers through more than 400 offices (excluding affiliates) worldwide. CBRE offers strategic advice and execution for property sales and leasing; corporate services; property, facilities and project management; mortgage banking; appraisal and valuation; development services; investment management; and research and consulting. Please visit our website at www.cbre.com.

     

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