Office rents on Hong Kong Island to decline by up to 3% in 2025

The 2.8m sq ft of new supply will take time to absorb.

In October, the Hong Kong office market continued to navigate a challenging environment, according to a Knight Frank report.

“The office vacancy rate on Hong Kong Island remained relatively high at 13.3%, showing only a minimal improvement of 0.1% compared to September. The overall Grade A office rents on Hong Kong island held steady at HK$61.9 per sq ft in October, the same as in September, but down 6.5% YoY and 3.6% YTD,” the report said.

Here’s more from Knight Frank:

While challenges remain, there are positive indicators of moderate recovery in the financial landscape. Leasing activity in Central gained traction, driven primarily by increased demand from the financial sector. Notable transactions included a Chinese digital bank, WeBank, leasing 11,246 sq ft of office space in Three Exchange Square, and a US asset management firm leasing 14,568 sq ft in Two IFC.

As Hong Kong’s financial markets gradually recover, we expect to see modest growth in office demand in the near term. The government has launched several initiatives – such as by collaborating with large‑scale sovereign wealth funds, expanding the scope of tax concessions for funds and single-family offices – to promote the growth of the asset management business. This is expected to further drive demand for office space, particularly in Central.

Nonetheless, we believe that rents will remain under pressure. The current high vacancy rate, coupled with the expected addition of 2.8 million sq ft of new supply on Hong Kong Island in 2025, will take time to absorb. We project a decline of 0% to 3% in office rents on Hong Kong Island throughout 2025.