Hong Kong Island office rents drop by 5.7% in March

Traditional Grade A offices saw a steeper decline.

In a recent report, Knight Frank said office rents on Hong Kong Island have continued to decline, with the rents in March recorded at HK$59.8 per sq ft. This represents a 1.6% MoM and 5.7% YoY decrease, marking the third consecutive month of falling rents.

“Traditional Grade A offices in Central have experienced a more pronounced drop, with a 3.7% MoM decrease in monthly rents. As a result, more tenants are seeking higher-quality office leasing options,” the report added.

Here’s more from Knight Frank:

Office market leasing demand in March was largely driven by insurance companies, law firms and hedge funds. Several major insurance companies were actively exploring opportunities to upgrade their office space. Law firms, particularly those from Chinese mainland, were also experiencing an increase in inquiries about office consolidation, relocation and upgrades.

While office rents in CBD continued to undergo downward adjustment, the rental gap among districts was narrowing. This allowed companies who previously located in decentralised districts to take advantage of the current market conditions to recentralise their office.

Despite the heightened economic uncertainty amid the US tariff policy, the Hong Kong office leasing market has not yet shown immediate impacts. Companies appear to be adopting a cautious approach, opting to monitor market conditions as policy amendments and global dynamics change too rapidly.

Looking ahead, more major developments set to enter the market, including One Causeway Bay, Lee Garden Eight and Central Crossing. Other offices will continue to face challenges in balancing overall occupancy and rents, as tenants are presented with more options. We expect office rents to remain under pressure in 2025.