Grade A office rents are expected to continue to consolidate during the first half of 2021 while rental movement in the second half will be vaccine and travel dependent.

• Overall rents fell by 5.1% in Q4/2020 and by 16.6% over 2020 as a whole marking the largest yearly decline since 2009.
• Kowloon East recorded the largest fall in rents (-8.7%) among all office sub-markets.
• Overall Grade A office vacancy rose from 4.7% at the end of 2019 to 8.4% in the last month of 2020.
• We observe MNCs have begun to downsize their operations while working from home arrangements have been adopted mostly by overseas corporates.
• Opportunistic coworking brands are taking on surrendered space given lower rents and savings on capex and fixtures and fittings, allowing new operators to take a chance that things will improve this year.
• We expect overall Grade A rents to fall by 5.0% to 10.0% in 2021 with rents to decline over the first half before stabilising in the second, depending on the availability of vaccines and the status of cross-border restrictions.