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Hong Kong’s Office Demand to Slow, Jones Lang LaSalle Says

Kelvin Wong and Michelle Yun BusinessWeek 12/08/2011 01:19
Hong Kong’s Office Demand to Slow, Jones Lang LaSalle Says - Real Estate - Property - Hong Kong - Business

Hong Kong’s prime office demand is expected to slow after rents climbed 16 percent in the first 11 months of this year, according the world’s second-biggest publicly traded commercial-property broker.

There’s “temporary pressure” on rental in the city’s core office district, Gavin Morgan, deputy managing director for Hong Kong at Jones Lang LaSalle Inc., said at a briefing today, adding that any rental correction will probably be “short- lived” because of tight supply.

The city dropped out of the top five places for real estate investment in the Asia-Pacific region for the first time in five years, according to a PricewaterhouseCoopers LLP and Urban Land Institute report today, which ranked Hong Kong 14th out of 21 among the region’s top investment destinations for 2012.

Prime office rents in Hong Kong have risen 60 percent since July 2009 as financial services companies expand amid increasing corporate finance activities by Chinese companies, according to CBRE Group Inc. Grade A office rents in Hong Kong reached $213.7 per square foot a year as of June, the costliest in the world, according to Colliers International.

“Many interviewees believe Hong Kong is a fully priced market,” Patrick Phillips, chief executive officer of the Washington-based Urban Land Institute, said in a media briefing in Hong Kong today. The shortage of land and high development costs means there’s “limited upside potential.”