Rental declines are expected to be mild over the remainder of 2021 before the supply challenges of 2022 and 2023. 

• Grade A rents fell by 2.6% in Q2/2021 compared with a 3.5% decline in Q1/2021.
•  While there is broad agreement in the business community that the worst times are behind us, questions linger over when the best times will return, and tenants remain cautious.
• Leasing demand from PRC corporates proved to be resilient over the quarter and was largely financial services driven.
• Vacancy rates are elevated at 9.3% (5.7 million sq ft) but patchy as some buildings continue to report high occupancy levels and remain quite selective regarding tenants.
• Kowloon may not be able to maintain its vacancy levels in 2022 given that 2.4 million sq ft net out of 3.9 million sq ft net of new supply will come on stream in the area.
• The proportion of Central Grade A offices occupied by PRC firms increased from 20.5% in July 2017 to 23.5% in June 2021 despite the challenging market conditions.