Rental value of Hong Kong tycoon’s skyscraper drops 33% since 2019

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 per cent drop in the five years to 2023 inclusive, according to Centaline Property Agency. New buildings including The Henderson dented rents for existing ones, it said.

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 per cent in the first quarter, according to CBRE Group. 

The government assesses the annual rental value of each building to charge landlords a property tax called rates, which are set at 5 per cent of the estimated rental value.

Cheung Kong Center, owned by CK Asset Holdings, had been about a quarter empty for the past year while a new second-phase building has managed to rent out only about 10 per cent of space, people familiar with the details said in May. The Henderson, owned by Henderson Land Development, still had about 40 per cent of space vacant as at May.

Adding to the competition, there will be an additional 65,868 square metres of office supply – the size of about nine football fields – completed between the second and fourth quarters of the year, according to CBRE. BLOOMBERG