The former industrial district is gaining its momentum to be the main office hub with bigger office in wider options and comparably lower rents
Hong Kong, 14 February, 2017 – Colliers International (NASDAQ
and TSX: CIGI) releases their latest report revealing Kowloon East as the preferred
alternative for companies searching for office space outside of core-CBD area. Lower
rental cost, bigger office space, wider range of options and larger new supply
of Grade A offices compared to Central/Admiralty are the factors that drive
Kowloon East as the next main office hub. Landlords are also expected to
continue to provide flexibility on rent and non-monetary incentives to cope
with the competition for quality tenants, especially for landlords in
stratified office building built prior to 2012 which do not have direct access
to MTR station.
The report highlights since the decommissioning of the old
Kai Tak airport, a number of government initiatives were completed to revive
the Kowloon East area as the CDB2 of Hong Kong. Establishment of the Kai Tak
Cruise Terminal and the Kwun Tong Promenade development have put Kowloon East
back on the modern map. It has changed the perception of Kowloon East area from
an old industrial area to a modern and vibrant district. By 2021, the Sha Tin to Central Link will also
be completed which will further enhance the accessibilities to the CDB2.
Business sectors have already noticed the progresses in which
Kwun Tong is particularly popular for banking and insurance companies who have
already established a strong presence. “The number of job growth and the mix of
employment opportunities at Kowloon East have changed dramatically between 2000
and 2015. Since the new millennium, Kwun Tong has added 100,000 new jobs,
representing 47% growth, compared to 22 % for overall Hong Kong during the same
period”, said Fiona Ngan, general manager of Office Services.
“In contrast to Central and Admiralty, Kowloon East offers a
wider range of office options. In addition to Grade A and Grade B buildings,
there are also sizeable I/O buildings, industrial buildings and newly revitalised
office buildings available for selection. The existing Central Business
District (CBD) in Central is already saturated with constantly low office vacancy,
whereas the new Grade A office supply in Kowloon East has created additional
room for multinational companies to consolidate their operations”, added Fiona.
office currently comprises 72% of Kowloon East office. In the next 5 years, Colliers
expects an additional 4 million sq ft of Grade A office will be furnished. By
2020, Kowloon East will have the second largest Grade A office supply in Hong
Kong with a total Grade A office space exceeding 15 million sq ft.
Daniel Shih, director of Research said, “Tenants should take
advantage of a wide range of office space options in Kowloon East to match with
their own strategy. Companies looking for a long-term solution may consider
owner-occupier to hedge against future rent increases and enjoy capital
appreciation. On the other hand, Landlords
will face fiercer competition for quality tenants. Flexibility on rent and
non-monetary incentives will be critical in a competitive leasing market to
attract and retain target tenants, especially for Landlords in stratified
office buildings built prior to 2012, which do not have direct access to MTR
In summary, it is foreseeable that companies will find Kowloon
East as a very attractive office location with improved infrastructure in the
area, high quality office space, better amenities and more affordable rent.