Grade A office rents predicted to jump 2% over the next 12 months

Mild growth amidst weaker business conditions.

According to Colliers International, with more companies turning cautious in hiring amid deteriorating business conditions, office-leasing demand will progressively weaken. The overall Grade A office rents are set to slow and undergo mild growth of 2% over the next 12 months.

The Double Stamp Duty introduced by the Hong Kong government has effectively suppressed acquisition demand as the number of office sales deals fell sharply in 2Q 2013 with short-term investors shying away from the market.

Overall Grade A office rents stabilised at 0.9% QoQ in 2Q 2013, with some signs of small- and medium-sized enterprises reducing their CBD footprint for downsizing and cost-savings reasons.

Genuine buying interest among individual cash-rich corporations was still demonstrated in 2Q 2013. The latest example being Canadian insurer Manulife, acquiring the West Tower at One Bay East in Kowloon East for HK$4.5 billion for its own occupation, despite being caught by the doubling of stamp duty.