Standard and Poor's: Expects Hong Kong Grade A office rents to fall by 8-10% this year.

Credit rating agency Standard & Poor's published a report stating that it is expected that Hong Kong office rents will continue to decline this year, with valuations following suit. Major real estate developers holding Grade A office properties will face property valuation downgrades. The agency predicts that Hong Kong Grade A office rents will fall by 8-10% this year, exceeding the original estimate of 5%, meaning rents will fall to the levels of 2012. The report points out that Hong Kong property developers are facing economic uncertainties and fierce competition from newly completed office buildings. It is expected that landlords will take more measures to retain tenants, including lowering rents when renewing leases. The situation of distressed owners selling office buildings may increase, and even the most stable owners will see impacts on the valuations of their office properties. Standard & Poor's Global Ratings credit analyst Ricky Tsang stated that despite rents steadily declining over the past five years, the valuations of major real estate developers have remained relatively stable. However, the fair value impact on office assets may be significant. Over the past year, the absorption of office space in Hong Kong has increased, reflecting rising demand or the absorption of new supply, but demand still lags behind pre-pandemic levels.