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The shift to working from home may not harm office demand much in the world’s most expensive property market, as companies and workers brush against the limitations of the arrangement.
In contrast to much of the rest of the developed world, the work-from-home trend may have been overplayed in Hong Kong, according to Cusson Leung, head of Asia property research at JPMorgan Chase & Co.
The need for social contact, the city’s cramped apartments, its efficient public transport network and short commutes all work in favor of a return to the office.
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“One major part of business activity is social interaction. You don’t have that working from home,” Leung said in an interview. “There will be increasing work flexibility, but at the same time employees will strongly oppose employers from completely removing their workstations from the office.”
JPMorgan expects office rents in Central, the city’s prime business district, to remain stable in 2021, while rents in other areas will rise by 5%.
A potential increase in demand from Chinese companies this year will also help support Hong Kong’s office market, Leung said. As China’s economy further recovers from the pandemic, more mainland firms are expected to expand in Hong Kong once borders re-open.
Hong Kong’s office market has beenunder pressure the past year as the economy worsens during the pandemic. Grade A office rents in Hong Kongfell 17% in 2020, the largest annual decline since 2009, according to Savills Plc.
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