Office rents in Hong Kong are projected to slip to levels last seen in 2012, a scenario that would erode the value of commercial properties owned by the city’s biggest landlords and force weak owners to sell their assets at deep discounts, according to S&P Global Ratings.
Prime office rents could slide by as much as 10 per cent this year, the rating company said in a report released on Thursday, doubling its previous forecast for a 5 per cent drop. Fresh supply of office space from newly completed projects would intensify pressure on asset owners in a tenant’s market, it added.
“Hong Kong landlords are contending with economic uncertainty and rising competition from new builds,” credit analyst Oscar Chung said in the report. “We expect they will employ more tactics to retain tenants, including deeper cuts in rent rates for renewals.”
