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Kowloon East is rising

The perception of a sustained low- interest-rate environment, continued growth in Grade A office rents and abundant liquidity in the marketplace indicates an investment opportunity for owner occupiers to enter the office sales market.

The limited buying options of office space in the core areas of Central, Wan Chai, Causeway Bay and Island East, as well as high rents, have encouraged more long-term investors and end-users to consider decentralized areas such as Kowloon East.

The emergence of Kowloon East as central business district 2 will be facilitated by the upcoming sizable supply there, coupled with infrastructure developments set for completion in the coming years. They include completion of the MTR Sha Tin-Central Link in 2020 and the Kai Tak cruise terminal, with its first berth to start operation last year.

Investment demand for office premises in Kowloon East was particularly strong over preceding quarters, reflecting investor confidence and the bright prospects for growth in the district. CBD 2 covers Kwun Tong, Kowloon Bay and Kai Tak, with a provision of more than 60 million square feet of impending office space, which is about three times the existing size of total office space in Central.

Apart from a well-established transportation network, a cluster of premium office buildings with good building management is an essential element of a core business district.

In Kowloon East, Millennium City on Kwun Tong Road signifies Sun Hung Kai Properties' initiative in transforming Kwun Tong into a vibrant commercial center.

The office/retail complexes continue to expand, and comprise more than 3.3 million sq ft of office space.

In the long run, completion of the Kai Tak monorail and the initial relocation of some government departments into Kai Tak will facilitate the transformation of Kowloon East into Hong Kong's CBD 2. In the first four months this year, Kowloon East continued to attract relocation demand from tenants - for example, those in insurance firms and the supporting departments of the banking and finance sectors - as average Grade A office rent in Kowloon East was only 35 percent of that in Central.

Looking forward, we believe the rental gap between Kowloon East and Central will continue to narrow amid the gradual completion of supporting facilities.

 

Source: The Standard May 23, 2013 - "Kowloon East is rising"

http://www.thestandard.com.hk/news_detail.asp?we_cat=16&art_id=133923&sid=39703858&con_type=1&d_str=20130523&fc=7 

Accessed 30 Dec 2013