Knight Frank has published the latest Hong Kong Office Market in 2020 report. It illustrates how Hong Kong’s Grade-A office market will develop in the next decade by reviewing the current market condition and projecting future demand and supply levels. Although the government has launched ambitious plans to mitigate the shortfall of office space, the imbalance of supply and demand in the Grade-A office market in Hong Kong would see little change during 2013 to 2016 until a wider range of office clusters emerge starting from 2017.
Knight Frank has identified eight major projects that will provide significant amounts of new office space, including the Central Harbour front development, Kowloon East CBD2, the West Kowloon Cultural District development, the redevelopment of Wan Chai government offices and the Wong Chuk Hang redevelopment in the public sector as well as the redevelopment of New World Centre and Taikoo Place in the private sector.
However, the efforts to re-balance supply and demand levels are unlikely to be realised in the short term. Thomas Lam, Director and Head of Research, Greater China at Knight Frank, says “it is unlikely that demand for office space will be satisfied by the current planning and development progress of major projects in the next seven years. Hong Kong is likely to face a shortage of office space of around 4 to 8 million sq ft (equivalent to 4 to 8 office towers of a comparable size to Two IFC’s) from 2013 to 2020.”
Meanwhile, Mr Lam points out the development progress of these future office clusters need to be closely monitored and it is estimated that demand-supply imbalance in the office market may begin to improve from 2017. Mr Lam remains positive about the long-term outlook for premium and Grade-A office buildings in the city, based on past examples of hard times during which vacant, high-quality office space was eventually taken up, even in the face of strong economic turmoil, due to sustained long-term demand for office space.