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(EstateNewsWire.com, March 17, 2013 ) London, U.K -- The city of Hong Kong is now likely to face a shortage of office space that will total anywhere from four- to eight-million square-feet by the end of the decade, according to a global property consultancy.
"It is unlikely that long-term demand for office space will be satisfied by the current planning and development progress of major projects," Knight Frank said in its latest Hong Kong Office Market in 2020 report.
The report stated that Hong Kong is likely to see an under-supply of the space based on current economic employment growth persisting. The number could grow from 4 million to 8 million if the local economy expands at a faster pace than the expected minimum, according to the report.
The calculations have been based off the city's economy expanded by about 3% per annum over a 140-year average, whilst service sector employment will continue to grow at nearly 2.2%.
The service sector employers tend to be the primary occupiers of the office spaces in Hong Kong. Knight Frank has projected that their growth could generate an additional demand of nearly 16.9 million square-feet during the seven years between now and the end of the decade.
The largest concern is that if the economy continues to grow at a 4% rate, while employment expands by nearly 3% per year during the same period, Hong Kong would need a further 21.2 million of office space.
"Our analysis shows that by 2020, an additional four to eight office towers of a comparable size to Two IFC is needed, on top of the current development pipeline," it said. "We … see little scope for rent correction in the overall Grade A office market, at least until the end of this decade."
Some believe that the government could help with the supply-demand disparity, though the rather ambitious plans thus far seem unlikely to be realized in such a relatively short period of time.
"The government should speed up its plans, such as turning Kowloon East into other central business district and redeveloping the three government office buildings near Gloucester Road in Wan Chai. Otherwise, we will have to wait beyond 2020 for more office supply," said Knight Frank's head of research for Greater China, Thomas Lam.
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