Anyone see the SCMP article from yesterday? I'm posting a short extract as I assume that doesn't raise copyright issues:
Central office rents to fall by half, says Merrill
Cost of grade-A space forecast to drop 50pc from peak by 2010
Oct 30, 2008
The global financial crisis will lead to office rents in Central falling by 50 per cent by 2010 from a peak of HK$116 per sq ft in the third quarter, Merrill Lynch says.
The financial management and advisory firm
"Central office rentals are expected to fall because of weak office demand amid the global recession and increased supply from spaces vacated by relocating tenants to decentralised locations, or potential business closures," Merrill said in its latest property report.
Previously, the firm had said it expected office rents to drop by 25 per cent to HK$72 per sq ft by the end of next year.
However, in its latest report it said that forecast might have been conservative in view of current difficult market conditions.
Merrill expects rents in Central to drop to HK$75 per sq ft by the end of next year and to about HK$60 per sq ft by the end of 2010. But it is optimistic that the downfall will be less dramatic than the 57 per cent decline after the Asian financial crisis of 1997/98 and outbreak of severe acute respiratory syndrome in 2003.
It also believes residential prices will drop by 20 per cent between now and the end of next year, while retail rents will drop by 10 per cent.