ASIA PACIFIC OUTLOOK 2025

HONG KONG

KEY MESSAGES

Supply

Demand

Rents

Key Outlook

Looking ahead, we expect that demand from the banking & finance and professional services sectors may gradually recover if the recent IPO performance can sustain through the coming months. Landlords are expected to remain flexible and to offer incentives to compete for tenants amidst the current market conditions.

New supply of more than 3.5 million sq ft will enter the city's market in 2025, with Greater Tsim Sha Tsui accounting for the greatest share at 2.1 million sq ft. However, most of the major new supply will be concentrated in H2 2025 period, suggesting that the market will remain stable in the next 6–9 months. In the longer term, new supply will gradually taper off, with just 1.5 million sq ft due in 2026–2027, before a haltin new completions in 2028– 2029.

Hong Kong’s office market registered a fourth consecutive quarter of positive net absorption in Q3 2024. We expect take-up will remain stable through 2024. With no major new supply of more than 200,000 sq ft entering the market in the next 6–9 months, we expect the overall availability rate to remain stable in the 1H 2025 period. Occupiers are likely to continue to search for flight-to-quality options in the market, with landlords also more willing to consider upgrades to their properties.

Although we are seeing a recovery in overall office space absorption, ample supply will continue to affect the rental level trend. We expect the overall Grade A office rental level to decline by 7% in 2024, followed by a further 8% drop in 2025. The current rental level is approximately 40% down from the peak seen in January 2019. We expect that by the end of 2024, the overall rental level will be at HKD44.6 per sq ft per month, before bottoming out in 2027 at HKD39.0 per sq ft per month.

Cushman & Wakefield

ASIA PACIFIC OUTLOOK 2025