Nancy Li Lippo centre in Admiralty saw the rent for the whole of one of its floors decrease by 30 percent to about HK$467,200 a month, or HK$37 per square foot, recently. That's a retrogression to the level of nine years ago. The floor in question is the 14th, and the lessee has been a long-term tenant, having occupied the 12,627-square-foot space since 2006 after many renewals.
While the rent had remained at HK$681,858 a month since the last time that pens were put to a contract in 2015, the latest renewal, which is effective from this month to July 2028, is seeing the monthly payable plunge to HK$467,199. Tenancies are not the only malaise for owners at the landmark. Before details of this rental deal surfaced, a unit sold at a 14-year low of HK$14,852 psf, a 64-percent plunge from the peak of about HK$41,500 in October 2018, when rooms one, two and eight, which offered 5,794 sq ft, on the 36th floor of tower one went for HK$240 million.
Rental and sale prices for grade-A offices have generally been dropping sharply to levels of more than 10 years ago, and lower-priced tenancies have been surfacing nore frequently as market demand has shrunk due to the economic downturn. Tenants tend to prefer renovated properties for the potential cost savings that they offer, and some landlords are offering rent reductions to hold on to long-time tenants during times of lease renewals. Room 3709, a 2,700-sq-ft space, in Lippo Centre's tower two was sold off for HK$40.
1 million, or an average price of HK$14,852 psf. Though it's a quality property with sea views to Wan Chai north and the Lei Yue Mun typhoon shelter, the price is the lowest in 14 years and harks back to levels seen in 2010. The property comes with a tenant who's paying HK$100,000 a month as part of a lease deal that ends next October, and the rental yield is expected to be about 3 percent.
The deals are struck at price levels seen in October 2010, when a 1,173-sq-ft room 1304 in tower two was sold off for HK$16.77 million, or HK$14,300 psf. Its efficiency rate was 65.
4 percent, which is lower than the 67.04 percent for room 3709. However, while grade-A offices are diving in rental and sale prices, rents for shops are recovering from lows seen during the Covid-19 lockdowns.
A sizeable shop on Kai Chiu Road in Causeway Bay has been rented out earlier last month for a reported HK$720,000, or HK$288 psf, to a new tenant. The duplex property offers 2,500 sq ft, spread over the ground and first floors of 10 Kai Chiu Road. The latest rental price is 89.
47 percent higher than two years ago, when the current short-term tenant agreed to a deal in September 2022 at the height of the lockdown for HK$380,000 a month. Before 2022, the shop had housed many luxury brands. Chow Tai Fok, for example, rented the property from the end of 2017 to November 2020 for HK$1.
2 million a month. After that, it changed the lease from a long- to a short-term one and moved out when there didn't seem to be light at the end of the pandemic tunnel. Before Chow Tai Fok, Glashutte Watch had rented the shop for a peak price of HK$2.
1 million from December 2014 to November 2011. The shop's location is more popular than even the section of Russell Street between Kennedy Road West and Percival Street. While Russell Street is like a "brand showcase" with strong advertising impact, Kai Chiu Road brings in throngs of people who are lured in by sales promotions, said Ricacorp Properties senior sales director Dennis Cheng.
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