Many have speculated that the growth was unsustainable, but I think it can be sustained, because the current rates are still three or four times lower than they were in the 1990s, which was the heyday of Hong Kong's real estate market. There's some room to move up.
In Shanghai and Beijing, though demand is strong, there's a lot of supply. Landlords tend to attract the same group of customers with lower prices, and that explains why rents are fairly flat.
In Taipei, we are seeing strong take-up and the absence of new supply, leading to a decline in office vacancy rates. Because the economy has grown strongly, head-count expansion is being factored into firms' calculation of their space requirements. Besides, some tenants are looking to move from grade B and C buildings to grade A properties in the central business district. The vacancy rate in Taipei has decreased, from 19 percent last year to 10 percent now. However, Taipei is still lagging a bit behind the recovery in the market, so rents will stabilize and stay at current levels.
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