Hong Kong Grade A office market sees strongest rent growth since 2018

Rents rose 1.6% in Q1.

Hong Kong’s Grade A office market recorded its fourth consecutive quarter of positive net absorption in Q1 2026, reaching 375,400 sq. ft., as occupier demand for high-quality space remained resilient despite seasonally slower leasing activity, according to CBRE.

Over the past four quarters, total net absorption has reached 2.7 million sq. ft., underscoring sustained recovery momentum. Central led the gains with 162,900 sq. ft. of net absorption, marking its fifth straight quarter of growth, supported by improved occupancy across both Grade A1 and non-A1 buildings.

In contrast, Greater Tsim Sha Tsui posted negative net absorption of 45,600 sq. ft., its first decline since Q4 2024, while Kowloon East also recorded negative absorption as tenants returned space following relocations.

The absence of new supply alongside continued positive absorption pushed vacancy down by 0.4 percentage points to 16.8%, representing the sharpest quarterly decline since Q2 2015, CBRE said.

Rental performance strengthened, with overall Grade A office rents rising 1.6% quarter-on-quarter—the fastest growth since Q3 2018. Central drove the increase with a 5.9% rise, while Greater Tsim Sha Tsui recorded a more modest 0.9% gain. Notably, Grade A1 buildings in Central saw rents surge 12.1% quarter-on-quarter, the strongest growth since Q3 2010, amid tight vacancy levels. Decentralised submarkets, however, continued to experience rental declines.

Ada Fung, Chief Operating Officer, Advisory Services at CBRE Hong Kong, said leasing momentum was subdued in Q1 but highlighted ongoing demand from financial institutions.

“Selective submarkets continued to see strengthening occupier demand for high-quality buildings,” Fung said. “Banks and financial services companies were particularly active, looking for flight-to-quality and upgrading options.”

Fung added that the sustained positive absorption reflects robust demand for prime office space, particularly in Central where vacancies remain in the low single digits.

Looking ahead, CBRE expects leasing activity to pick up over the next two quarters, supported by expansion in Hong Kong’s wealth management and insurance sectors.