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Colliers releases Quarterly Update for Q3 2021

HONG KONG SAR, 19 October 2021 – Leading diversified professional services and investment management company Colliers (NASDAQ and TSX: CIGI) has today released the Quarterly Update for Q3 2021 to review the performance of Hong Kong’s office leasing and property investment markets. The reports also present opportunities for investors, landlords and occupiers.

Hong Kong’s economic outlook has brightened as the pandemic has eased, unemployment rate fell to 4.7% between June and August, and the GDP grew by 7.6% YOY. This has facilitated the revival of business activities. 

Rosanna Tang, Head of Research, Hong Kong & Greater Bay Area, commented: “With the resumption of business activities, office leasing demand continued to recover in Q3 2021. Overall net absorption rebounded to 70,900 sq. ft., the first positive quarter since Q3 2019, bringing the overall vacancy rate to 10.4%. The CBD also witnessed a recovery in demand around the CBD area, with Central’s vacancy rate dropping for the second consecutive quarter from 7.6% in Q1 to 7.2% in Q3 2021.” 

Commenting on the investment market outlook, Tang added: “Improved economic performance should strengthen investors’ confidence in the real estate market across multiple sectors. We forecast further pick-up in investment activity before the end of 2021, especially from some real estate funds as they need to deliver against their mandates to deploy capital before year-end. In addition, other investors are also looking to leverage the attractive pricing of current assets before they start to recover from 2022/23 onwards.”

Office sector: Overall rental performance improved, with cross-border initiatives fanning long-term office demand

The market’s rental correction continued to decelerate in Q3 2021. Overall rent edged down by 0.3% QOQ, compared to the drop of 1.6% QOQ in Q2. Some submarkets even started to see rental rebound – rent in Central/Admiralty slightly rebounded by 0.3% QOQ, the first quarter with positive rental performance since Q2 2019. Tsim Sha Tsui also recorded a 1.4% QOQ rental rebound, mainly driven by leasing demand from co-working operators and occupiers from Hong Kong Island and within Kowloon side with relocation needs. 

With the launch of both the cross-boundary Wealth Management Connect Scheme and the Come2HK Scheme in September, it should drive long-term leasing demand further, and pave the way for the cross-border business travels.

“Amid the current tenants’ market, decentralisation remains a key trend, and landlords should look to upgrade their properties to remain competitive when new office supply comes online from 2022 onwards. For occupiers, the timing is right for to seek flight-for-quality options while rents are still attractive,” said Chris Currie, Head of Occupier Services in Hong Kong.

Investment sector: Limited industrial assets turned investors to alternative assets, and individual investors became more active

Total investment volume in Q3 2021 reached HK$18.9 billion (US$2.4 billion), with industrial transactions accounting for 45% of the total which also included six en-bloc transactions. Alternatley, some investors have paid more attention to hotel and core district retail properties compared to the previous two quarters. In Q3 2021, three hotels were sold reaching HK$1.6 billion (US$202 million), the highest transaction volume for the sector since Q2 2020.

“Despite defensive assets such as data centre, cold storage and neighbourhood malls stay popular among investors, the lack of available stock and increased competition is anticpated to  draw out some investors to allocate their capital to alternative assets, such as strata-title office and core district retail properties. We foresee prices for most commercial properties to hit the bottom by year-end, making now an opportune time for investors to enter the market,” said Thomas Chak, Executive Director of Capital Markets & Investment Services.

In terms of investor profile, institutional investors remained the major contributor of Q3 2021’s transaction volume, with their transactions accounted for 63%. Yet the quarter also witnessed individual/private investors became more active, in particular in the retail sector which their transactions accounted for most retail’s in Q3.

To find out more about the office leasing and property investment sectors, please download the full reports: Office and Investment.

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Thomas Chak

Co-Head Capital Markets & Investment Services

Capital Markets & Investment Services

Hong Kong

Being an award-winning industry specialist, Thomas is highly regarded amongst his peers and clients with over 18 years’ property investment experience. The key client focus of Capital Markets remains institutional clients, local investors and developers, family offices and private high net worth individuals as well as PRC inbound capital. 


Thomas develops and fosters partnership and consultancy based approaches to clients, resulting in improved profitability through high client retention rates and improved business profile. 


Thomas has joined Colliers as Executive Director of Capital Markets in July 2019. In a way, this is a homecoming for Thomas as he was with Colliers’ Capital Markets team between 2006 and 2008.  Prior to joining back Colliers, he was with Knight Frank as Senior Director of Capital Markets, where he completed transactions of over HK$8 billion.   

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