Hong Kong central office rents set to rise in second half

Office rents in Hong Kong’s Central district are forecast to increase faster from the second quarter, reversing a slump that started in late 2019. Stronger demand has already cut grade-A vacancy rates to 9.6 per cent, a four-year low.

US bank Citi reported that premium office rents in Central have risen 1.7 per cent from an October low. Analysts Griffin Chan and Cindy Li said in a report released on Wednesday that lease negotiations have favoured landlords since late 2025 and are strengthening further in 2026.

They attributed the improvement to capital inflows, higher capital market activity and overseas expansion by Chinese firms. Additional gains are expected between the second half of this year and 2027.

Nearby districts are also benefiting. Admiralty is absorbing demand spilling over from Central, while West Kowloon has recorded robust take-up.

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Hong Kong's commercial property market attracted US$1.6 billion in investment in the first quarter, up 41 per cent year-on-year, according to JLL, driven by demand for office, retail and hotel assets. Peer firm CBRE reported HK$12.3 billion (US$1.57 billion), up 105 per cent, amid lower Hibor rates and improving liquidity.

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Hong Kong developers have priced new units 7 to 36 per cent higher than before as demand firms up.

Hong Kong developer New World Development has stepped back from consolidating three commercial sites in Causeway Bay due to high costs and patchy demand. The firm, which is selling assets to cut debt, said it would exercise prudence regarding costs, efficiency, and market conditions to deliver reasonable returns. Analysts describe a two-speed recovery in the city's commercial property market.

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Hong Kong homebuyers have extended a sell-out streak, with strong demand pushing prices to a 22-month high. Agents expect sentiment to remain firm amid steady interest in new launches. All 88 units at New World Development and MTR Corporation's Pavilia Farm III in Sha Tin sold on Saturday.

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