Office rents in Kowloon East softened by 3% in 2Q14

Upcoming new supply tagged as the driver.

While Central experienced a minor firming in rents due to Chinese corporate demand, in contrast office rents in Kowloon East softened by 3% QoQ in 2Q 2014 to HK$35 per sq ft per month.

According to a research and forecast report from Colliers International on 2Q 2014, the primary driver for softening rents in Kowloon East is the upcoming new supply.

As competition to secure tenants increases, the report said that a general trend amongst landlords offering negotiable asking rents and incentives packages is being witnessed.

Here's more from Colliers International:

Despite the short-term market volatility, given the limited availability of buildings with large floor plates in the marketplace, Kowloon East will continue to develop and thrive in the long term, capturing demand from tenants with sizable office space requirements (50,000 sq ft or above) as well as those who are cost sensitive.

Our research suggests a medium-term supply pipeline for Grade A office space in this sub-market of approximately 4 million sq ft over the next 4 years, which we believe will be met with adequate demand.

Average Grade A office rents continue to hover around HK$64 per sq ft per month.