Property services firm Colliers International released a report on Wednesday saying that the worst is over for Hong Kong’s real estate market and the company backed up that prediction just one day later by announcing a pair of senior hires for its local team.
John Davies is joining Colliers as an executive director tasked with upgrading the firm’s office leasing and investment advisory work in Kowloon and the New Territories, according to the company statement. Former Savills director Terry Shum is coming aboard as a director at Colliers, to leverage his Kowloon office leasing expertise while working together with Davies.
Both appointments are aimed at boosting Colliers’ efforts beyond Hong Kong island, where ongoing redevelopment efforts, lower leasing rates, and a generation of top-specification buildings are shifting Hong Kong’s commercial centre of gravity away from its traditional focus in Central district.
Eyes Across the Harbour
“We have been waiting for the right appointment to enhance our office and industrial leasing expertise in Kowloon and we are now fortunate enough to have two well-established professionals join the business together,” said Colliers’ managing director for Hong Kong, Nigel Smith. He added that, “Hong Kong’s focus on improving the city’s connectivity with the Greater Bay Area, building a second CBD and driving the migration of professional service firms in Kowloon aligns with the expertise and remit of John and Terry.”
Davies is taking on his new role after more than fourteen years with CBRE in Hong Kong, where he once worked shoulder-to-shoulder with Smith. Over the last eight years, Davies had been part of CBRE’s capital markets team after earlier working in office leasing.
In his new role, Davies is expected to upgrade Colliers’ Kowloon office leasing while also strengthening its efforts in the industrial sector, where recent rule changes are expected to accelerate investment in ageing workshops and go-downs.
Colliers hire of Davies comes less than four months after the company added former CBRE executive Stanley Wong to its Hong Kong team to strengthen its services to investors in the capital markets sector.
Shum is bringing with him 20 years of experience in Hong Kong’s office markets including stints at JLL, CBRE and Knight Frank, before he joined Savills in 2019. With his time at the UK agency cut short last February as the COVID-19 pandemic chilled commercial activity in Hong Kong, the office veteran sees brighter times on the way.
In a statement, Shum noted strong levels of office leasing activity in Kowloon and the New Territories, which he predicted would continue to offer occupiers opportunity as landlords open up more projects for occupancy.
Slide to Stop
While Colliers continues to predict a 7 percent drop in office leasing rates for Hong Kong this year, compared to 2020, the agency said in its report last week, “Calling the Bottom of the Office Market in 2021,” that it believes much of that reduction will have taken place in the first half of this year.
The firm now predicts office rents will rebound by 3 percent in 2022 with the market for strata title office assets jumping by around 25 percent from 2022 to 2025.
While some major banks have been giving up office space in Central and other pricey areas of Hong Kong, there have already been signs of increased leasing activity, particularly in more affordable areas in Kowloon.
Just last week Canadian insurer Manulife announced that its Hong Kong division had leased 145,000 square feet (13,471 square metres) of office space at PAG’s International Trade Tower in the Kwun Tong area. That four-floor lease in Kowloon East was the largest recorded in the city since July 2019.
Also set to boost activity across the harbour from Central is the high speed rail terminus in West Kowloon. Sun Hung Kai is currently developing an office project directly above the rail station which is expected to add 3.16 million square feet of prime commercial space to the market when it is completed in 2025.