Even in today’s tough market conditions there are still tenants taking space and lot will depend on the return of PRC demand next year, particularly in core areas.

• Varied demand drivers in the final quarter of 2021 included crypto, art dealers and coworking operators with some (muted) mainland activity still in evidence.
• Overall Grade A rents fell by 1.3% during the fourth quarter with slightly higher rates of decline noted in Island East, Island South and Wanchai/Causeway Bay.
• Grade A rents fell by 5.4% over 2021 with the largest declines recorded in Island East (-8.1%), Wanchai/Causeway Bay (-7.7%) and Central (-6.5%).
• Looking ahead, over 2022 as a whole we are expecting a wave of new supply, 4.0 million sq ft net in total, only 120,000 sq ft of which has so far been pre-committed.
• Vacant space in today’s market totals 6.0 million sq ft, much of which is concentrated in Kowloon East at 1.9 million sq ft, followed by Central and Wanchai/Causeway Bay.
• We currently anticipate a rental fall of 10% to 15% over the year as a whole, bringing the peak-to-trough rental decline to 40% by year-end 2022.