Hong Kong’s tycoons are seeing their skyscrapers lose rental values by as much as a third, amid the worst commercial property market slump in more than a decade.
Billionaire Li Ka-shing’s Cheung Kong Center led the decline among major offices in the city, with a 33% drop in the five years through 2023, according to Centaline Property Agency Ltd. New buildings including The Henderson dented rents for existing ones, said Centaline.
The plunge in rental income underscores the pain in Hong Kong’s commercial market. A weak economy and the retreat of multinational companies have weighed on the sector in the past few years. The city’s vacancy rate was at a historic high of 16.7% in the first quarter, according to CBRE Group Inc.
The government assesses the annual rental value of each building to charge landlords a property tax called rates, which are set at 5% of the estimated rental value.
Cheung Kong Center, owned
by CK Asset Holdings Ltd, had been about a quarter empty for the past year, while a new second-phase building only managed to rent out about 10% of space, people familiar said in May. The Henderson, owned by Henderson Land Development Co, still had about 40% of space vacant as of May.
Adding to the competition, there will be an additional 709,000 sq ft (65,868 sq m) of office supply — the size of about nine football fields — completed between the second and fourth quarter of the year, according to CBRE.
Source: The edge Malaysia
