| ||
| ||
| ||
 |
|
|
|||||||||||||||||||||||||||||||||||||||||||||
HK skyline gets new contender
HONG KONG, China (Reuters) -- Hong Kong's skyline gets a new landmark in June, but celebrations to mark the completion of Asia's third-tallest building are likely to be muted as it threatens to put even more pressure on the severely depressed office market. The building, Two International Finance Centre (IFC2), has 88 floors and stands 420 meters (1,386 feet) high. "It's bad timing. IFC2 is coming on with 1.7 million square feet of office space when the market doesn't need it," said Ian Chapman, a director of property consultants Colliers Jardine. IFC2 is topped in Asia only by the 452-meter Petronas Twin Towers in Kuala Lumpur and Shanghai's Jinmao Tower at 421 meters. The building is part of an airport railway station complex in central Hong Kong and was conceived during the boom times before the onset of the Asian financial crisis in late 1997. "IFC2 symbolises Hong Kong as a fast and energetic place where you can find opportunity," said Gary Hui, an investment consultant who works nearby. "But I think it will take five years before Hong Kong is booming again." Economically battered Hong Kong hardly needs the extra space. Effective rents in prime offices in Central have plunged nearly 30 percent in the past year to around HK$20 ($2.60) per square foot a month, taking rent-free periods into account. Major tenants like JP Morgan, Credit Suisse First Boston and other big financial houses have been slashing jobs just as new office space, such as Hongkong Land Holdings Ltd's redeveloped Chater House nearby, becomes available. Sun Hung Kai Properties Ltd, part of the consortium that developed IFC2, said the new building is commanding contractual rents of HK$35-HK$45 per square foot. But property consultants say effective rents are as low as HK$18 once rent-free periods and other incentives are taken into account. Hong Kong office rents are at levels not seen since the 1980s. Their decline in the second half of 2002 was outpaced only by California's Silicon Valley, pushing Hong Kong to 18th place among the world's most expensive rental markets, according to property consultants CB Hillier Parker. After nearly two decades of dueling with Tokyo and London for having the most expensive office space in the world, Hong Kong is now cheaper than Birmingham in Britain and only marginally more expensive than Seoul. And it is poised to get even cheaper, analysts say. "Another 10-20 percent slide in office rents is quite likely this year," said David Faulkner, a director of property consultants Insignia Brooke. "If there is a bit of a recovery in the economy then it might bring in new demand but I am not seeing any sign of that at the moment." Overseas direct investment in Hong Kong slid 40 percent in 2002, the bear market in local equities is into a fourth year and economic growth forecasts are being slashed as a deadly flu-like virus hammers consumer spending and tourism. Even if the economy does rebound, new demand for office space is unlikely to boom. "People are looking at multiple offices in China now -- Hong Kong, Shanghai and Beijing -- so they are reducing their Hong Kong presence," said Faulkner. IFC2 has secured a few high-profile tenants, including Japanese investment bank Nomura and British newspaper the Financial Times. The Hong Kong Monetary Authority, the de facto central bank, has bought several floors at the top. "That still leaves an awful lot of space to fill," said Faulkner. "I think it will take most of next year to lease out." Designed by architects Cesar Pelli & Associates Inc, it was originally planned as two towers, and critics say it looks like one tower stacked on top of another. The building is on reclaimed land in front of the city's Central financial district. IFC2 will drop to fourth place in Asia when Taiwan's 508-meter Taipei Financial Center opens next year, pushing the Petronas Twin Towers into second place. Copyright 2003 Reuters. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.
|
|
|||||||||||||||||||||||||||||||||||||||||||||
|
|
