Shenzhen-HK Stock Connect to further boost office demand in HK's Central in 2017: JLL

The launch of Shenzhen-Hong Kong Stock Connect is expected to further support office demand from Chinese mainland financial services firms in Hong Kong's Central area, with an estimated up to 5 percent increase in rental in 2017, Jones Lang LaSalle Incorporated (JLL) said here on Tuesday.

Central's Grade A office rents have risen 9.2 percent year-on-year through the first 11 months of 2016, mainly driven by the sustained demand from mainland financial companies, the property consultancy said in its Year-end Property Review 2016 published on Tuesday.

Head of Leasing at JLL Ben Dickinson said the launch of Shenzhen-Hong Kong Stock Connect should further support the demand, helping Central buck the trend to reach zero to 5 percent rental growth in 2017, on the back of a tight vacancy environment.

JLL expects the overall leasing demand in Kong Kong to moderate next year owing to the modest growth forecast for the local economy, while Central is estimated to be the only submarket to record rental growth in 2017, it said.

All other office submarkets are expected to post declines with rents in Kowloon East, where vacancy is concentrated, under the greatest pressure, JLL said.

The report also said the tenant decentralization gathered pace in 2016 as the rental gap between core and non-core office areas widened to their largest levels in five years.

Grade A office rents in Central are now, on average, up to 3.3 times higher than those in non-core areas, the report said, adding a couple of UK law firms have relocated to Hong Kong East from Central, a trend that had previously not been seen in the market.

Source: Xinhua