Foreign companies are vacating Hong Kong offices at a blistering pace.
Multinational companies vacated 61 percent of the 577,000 square feet of office space that was vacated in the second quarter, according to Bloomberg. That’s compared to a 47 percent share of surrenders in the first quarter.
Total surrenders jumped 55 percent from the first quarter to the second quarter. Total availability — vacant space combined with space that will become available within 12 months — hit a 15-year high of 10.7 percent at the end of June.
Cushman & Wakefield’s Keith Hemshall said “there’s no particular area or one type of industry,” that’s vacating more than any other and attributed the surrenders to cost-cutting and layoffs.
Hong Kong’s overall real estate market has been on a downward spiral for over a year amid sustained protests against the Chinese government’s gradual erosion of Hong Kong’s financial and political quasi-independence. The coronavirus pandemic has only worsened the situation.
The Chinese government recently announced that it could freeze assets and seize real estate if its security minister has “reasonable grounds” to suspect the property is related to a national security threat, according to Bloomberg.
The value of retail space https://therealdeal.com/2020/05/16/rents-along-hong-kongs-top-retail-stretches-are-crumbling/ and residential properties https://therealdeal.com/2020/06/07/a-us-government-owned-property-in-hong-kong-might-sell-for-a-big-discount/ have also fallen over the last year or so.
Companies based in mainland China have been expanding their footprints in Hong Kong – several financial firms have leased more space in the second quarter, as have tech firms ByteDance and Alibaba. [Bloomberg] — Dennis Lynch