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South China Morning Post
07-07-2025
- Business
- South China Morning Post
Slowing decline in Hong Kong office rents unlikely to benefit distressed landlords
The decline in Hong Kong's office rents slowed in the second quarter amid rising leasing demand from finance and law firms, but analysts cautioned this trend was unlikely to substantially benefit landlords as prices are yet to recover. Overall grade A office rents fell 1 per cent quarter on quarter compared with steeper declines in earlier quarters, according to data from Cushman & Wakefield. Prime Central, Tsim Sha Tsui and Kowloon West recorded a milder decline in rents than districts like Kowloon East and Causeway Bay, by up to 0.6 per cent quarter-on-quarter, the data showed. 'A narrower rental decline signals that the market may be approaching greater stability, which is encouraging for both landlords and investors,' said John Siu, managing director at Cushman & Wakefield Hong Kong. 'It suggests that rental corrections are slowing, and that we may be nearing a pricing floor, especially in prime locations.' Office rents in Hong Kong have dropped by more than 42.8 per cent from a peak in 2019 due to a slump in the city's real estate market, Cushman said in a recent report. The monthly rent in Central, which has been historically known for having the world's most expensive office rents, has dropped to HK$89.30 (US$11.40) per square foot from HK$166.10 per square foot in January 2019. Hong Kong skyline as seen from The Peak. Photo: Sam Tsang HSBC Global Research said in a recent report that the office market was picking up amid improving financial activity in Hong Kong, but the research arm of Hong Kong's biggest bank expected downward pressure on rents to continue. It revised its full-year forecast for the office rent decline to 5 to 7 per cent from 7 to 10 per cent previously.
Associated Press
03-07-2025
- Business
- Associated Press
New Home Sales and Returning Investors Help Drive Hong Kong Residential Market Transactions
Overall Office Leasing Activity Picks Up, but Grade A Office and Prime Retail High-Street Rents Remain Under Pressure HONG KONG SAR - Media OutReach Newswire - 3 July 2025 - Global real estate services firm Cushman & Wakefield today held its Hong Kong Property Markets 1H 2025 Review and 2H Outlook press conference. The one-month Hong Kong Interbank Offered Rate (HIBOR) has been gradually softening since May, resulting in lower mortgage rates. Coupled with developers actively launching new residential projects at competitive prices, momentum in the primary residential market remained strong in the period. Improved rental yields also encouraged investors to re-enter the housing market, supporting monthly transaction volumes that exceeded 5,000 cases in Q2. In the Grade A office sector, net absorption remained positive in Q2, with Hong Kong Island showing greater resilience. However, high availability and an abundant future supply pipeline continued to weigh on rental performance. In the retail sector, despite a steady rise in visitor arrivals, retail sales have yet to show notable improvement. Vacancy pressures persisted, leading to a general downward trend of high street retail rents during Q2. Grade A office leasing market: New lease area reached 1.2 million sf, the highest level since the COVID-19 period The Hong Kong Grade A office market witnessed accelerated leasing momentum in Q2 2025, underpinned by relocation and expansion activities from the banking & finance and insurance sectors, The new leased transaction area for Q2 2025 reached 1.2 million sf, the highest quarterly level since Q3 2019. Several big-ticket deals were recorded, including Jane Street's pre-commitment of more than 207,000 sf at Site 3 at the Central Harbourfront project. The overall office availability rate remained largely stable at 19.3% in Q2, while quarterly positive net absorption slowed, dropping almost 50% to record 71,400 sf. With the new supply pipeline remaining abundant, the overall Grade A office rental level continued to trend down, dropping 1% q-o-q in Q2, contributing to an overall 3.4% drop for the 1H 2025 period. Chart 1: Rents of Grade A offices in Hong Kong John Siu, Managing Director, Hong Kong, Cushman & Wakefield, said, 'In the 1H 2025 period, the Hong Kong Stock Exchange is expected to rank first globally in terms of funds raised through the Initial Public Offering (IPO) market — reclaiming the top spot for the first time since 2019. With more Chinese mainland stocks expected in the pipeline, this should help support office market sentiment and stimulate downstream leasing demand, particularly in the banking & finance and professional services sectors. Despite the improving market sentiment, an ample new supply pipeline and high availability may continue to weigh on rental performance in 2H 2025, and we forecast the overall office rental to decline by 7%–9% throughout 2025.' John Siu added, 'According to Cushman & Wakefield's new What Occupiers Want 2025 report, the top three priorities shaping occupiers' leasing strategies are cost control, talent retention, and operational excellence. While occupiers remain cost-cautious, they increasingly recognize the importance of a healthy and engaging workplace in attracting and retaining talent. Against this backdrop, other than offering rental incentives, we encourage landlords to collaborate closely with occupiers to create unique and value-driven work environments, so as to stand out in today's highly competitive office market.' Retail leasing market: Retail sales continued to contract despite improving tourist arrivals, while high street rents remained under pressure For the January to May 2025 period, Hong Kong recorded more than 20 million visitor arrivals, growing 12% y-o-y. We believe this growth is supported by the opening of the Kai Tak Sports Park and the recent hosting of a range of mega-events at the venue. However, the rise in visitor numbers has not yet translated into stronger retail sales. From January to May 2025, total retail sales in Hong Kong amounted to HK$ 155.1 billion, reflecting a y-o-y decline of 4.0%. Visitor spending has become more cautious, with a growing preference for cultural experiences and value-for-money retail offerings. As a result, traditionally popular high-end retail categories have been most affected. Sales in the Jewellery & Watches and Apparel & Accessories sectors declined by 8.8% and 5.7% y-o-y, respectively. The Medicines & Cosmetics and Food, Alcoholic Beverages & Tobacco sectors recorded modest growth, rising by 3.4% and 2.7% y-o-y, respectively. Vacancy rates generally trended upwards across core retail districts in Q2 2025. The vacancy rate in Causeway Bay showed the most notable increase to climb to 13.2%, from 5.3% last quarter. Vacancy rates in Mongkok and Central rose slightly q-o-q, to 9.5% and 8.6%, respectively, while Tsimshatsui remained stable at 9.4%. Retail leasing activity was most active in Mongkok in the Q2 period, supported by the district's relatively attractive rental levels and stable tourist footfall. High street retail rents generally fell in Q2, in response to lifted vacancy pressure. Rents in Causeway Bay fell by 3.6% q-o-q, followed by Tsimshatsui and Mongkok at 3.4% and 1.7% q-o-q, respectively. Rents in Central rose slightly at 0.2% q-o-q, supported by resilient local demand. In the F&B sector, rents across districts recorded a mild decline on a q-o-q basis, within a 1% range. Chart 2: High street retail rents in prime districts in Hong Kong John Siu commented, 'The Hong Kong retail market is experiencing a reshuffling of tenants. Retailers and F&B operators that are promoting local culture, offering unique experiences, and offering high-quality services and products, will likely be favored by tourists and will be able to prosper in the market. In contrast, some traditional retailers will be forced out of the market due to their failure to adapt to the shifted consumption patterns. Nevertheless, leasing activity in core districts has remained active. The current attractive rental level is lowering entry costs for new market players, while benefitting more mass-market retailers aiming to enter high-street areas. Looking ahead, with the opening of the Kai Tak Stadium, we expect that the government will continue to promote mega-events and world-class concerts, in turn drawing more international visitors and tourism spending. We expect high street retail rents and F&B rents to remain largely stable in the 2H 2025 period, and to mildly correct in the range of -1% to -3% through 2025.' Residential market: Lower HIBOR and active new launches drive transactions; home prices stabilize in Q2 Overall sentiment in Hong Kong's residential market continued to improve in Q2 2025. The decline in the HIBOR during the quarter, which remained at relatively low levels, helped reduce mortgage and entry costs, creating favorable conditions for homebuyers. At the same time, developers actively launched new projects with attractive pricing strategies, fueling strong activity in the primary market and sustaining high overall transaction volumes. According to Cushman & Wakefield estimates, the total number of residential sales and purchase agreements in Q2 is expected to reach approximately 15,900, representing a 30% q-o-q increase, reflecting the continued market purchasing power. Chart 3: Number of residential sale & purchase agreements Rosanna Tang, Executive Director, Head of Research, Hong Kong, Cushman & Wakefield, added, 'The positive market response to new launches between March and May supported monthly transaction volumes exceeding 5,000 units, indicating resilient end-user demand and contributing to home price stabilization. Based on data from the Rating and Valuation Department, the overall residential price index edged up by 0.5% between April and May, narrowing the first five months' decline to 0.9%. On the leasing front, the growing number of expats and non-local students, coupled with the traditional leasing peak season in May and June, drove the private residential rental index up by 0.67% m-o-m in May, resulting in a 1.4% increase over the first five months of 2025. Looking ahead, while global uncertainties persist and the sustainability of low HIBOR remains uncertain, a potential interest rate cut by the U.S. later this year could further support lower HIBOR levels, providing a positive narrative for the housing market. We maintain our earlier forecast that overall transaction volume will be similar to last year, with full-year home price fluctuations expected to remain within a ±3% range.' Edgar Lai, Senior Director, Valuation and Consultancy Services, Hong Kong, Cushman & Wakefield, concluded, 'According to our tracking of popular housing estates, all market segments showed some improvement in Q2. Notably, City One Shatin, representing the mass market, recorded a 2.3% q-o-q sale price increase. Taikoo Shing, representing the mid-market, saw a modest 0.4% q-o-q rise, while Bel-Air, representing the luxury segment, saw sale prices decline narrowly by 2.5% q-o-q. Recently, some banks have relaunched mortgage cash rebate programs, effectively lowering the entry threshold and stimulating buying interest among prospective purchasers. Over the past one to two months, we observed an approximately 5% increase in mortgage inquiries compared to April. Among the newly signed provisional sale and purchase agreements, 60%–70% of transaction prices were 3% to 5% higher than their online valuations. These changes were most concentrated in properties priced at around the HK$10 million mark, and particularly in the HK$3– 4 million range, indicating a recovery in demand for small- to mid-sized units.' Please click here to download photos. Photo 1: (From left to right) Edgar Lai, Senior Director, Valuation and Consultancy Services, Hong Kong, Cushman & Wakefield; John Siu, Managing Director, Head of Project and Occupier Services, Hong Kong, Cushman & Wakefield and Rosanna Tang, Executive Director, Head of Research, Hong Kong, Cushman & Wakefield. Hashtag: #Cushman&Wakefield The issuer is solely responsible for the content of this announcement. About Cushman & Wakefield Cushman & Wakefield (NYSE: CWK) is a leading global commercial real estate services firm for property owners and occupiers with approximately 52,000 employees in nearly 400 offices and 60 countries. In Greater China, a network of 23 offices serves local markets across the region. In 2024, the firm reported revenue of $9.4 billion across its core services of Valuation, Consulting, Project & Development Services, Capital Markets, Project & Occupier Services, Industrial & Logistics, Retail, and others. Built around the belief that Better never settles, the firm receives numerous industry and business accolades for its award-winning culture. For additional information, visit or follow us on LinkedIn ( ).
South China Morning Post
20-06-2025
- Business
- South China Morning Post
Hong Kong home market on brink of turnaround, Morgan Stanley says
Hong Kong's residential property segment is on the verge of a turnaround that could last between four and five years, with home prices likely to rise starting in the second half of the year, according to Morgan Stanley. Advertisement The US investment bank said the first half of the year would end with prices down 2 per cent from a year earlier, while prices in the second half would rise 2 per cent year on year. The call essentially moves the recovery forward in time and smooths it out compared with the previous forecast, which called for a 5 per cent first-half decline followed by a 5 per cent second-half rise. This recovery was also likely to be sustained next year, said Praveen Choudhary, head of Hong Kong real estate research at Morgan Stanley and author of the report released on Friday. 'While we may be early, we see several reasons to be optimistic that we could be at the onset of an upcycle,' he said. The city's residential market had suffered through seven years of volatility, as prices hit a peak in July 2018, declined and then climbed back to another peak in September 2021, and since then have fallen nearly 30 per cent, according to official data. Advertisement 'The decline in prices is behind us, and from here on we expect positive price increases,' Choudhary said.
South China Morning Post
29-05-2025
- Business
- South China Morning Post
Ex-Hong Kong leader Tung Chee-hwa's sister buys US$15 million flat at discount
The sister of former Hong Kong chief executive Tung Chee-hwa bought a HK$119 million (US$15.2 million) flat in the Mid-Levels neighbourhood, joining a cohort of wealthy investors who have been taking advantage of depressed prices to snap up luxury homes A 3,349 sq ft, four-bedroom unit in Grenville House, located at 3 Magazine Gap Road in Mid-Levels, was sold on Tuesday, according to Land Registry records. Shirley Shiao Ping Peng and William Peng Shih-Hsiao appear to be the directors of the acquiring firm, Noble Gather, according to the Companies Registry. Shirley Peng is the sister of Tung and the widow of Peng Yin-kang, chairman of Chinese Maritime Transport. William Peng, their son, is now chairman. The sale was around 8.5 per cent cheaper than a previous Grenville House deal. A flat on a lower level, but with the same floor area, sold for HK$130 million in December, according to a transaction record from Centaline. And it was 26 per cent cheaper than the HK$160 million paid by Tung for another unit in 2021, according to reports in local media.
South China Morning Post
24-05-2025
- Business
- South China Morning Post
Hong Kong homebuyers flock to latest Sierra Sea units as mortgage rates ease
Emboldened by lower mortgage rates, Hong Kong homebuyers on Saturday purchased all 216 of the new units offered at Sun Hung Kai Properties ' Sierra Sea project in Sai Sha in the New Territories. All units found buyers within six hours of the sale, which began at 10am, according to agents. Another 25 units were available via tender. Earlier this week, the one-month Hong Kong interbank offered rate (Hibor), which is linked to mortgage loans, fell below 1 per cent for the first time since July 2022. On Friday, the one-month Hibor settled at 0.58964, according to the Hong Kong Association of Banks. 'Benefiting from a decline in the one-month Hibor, mortgage burdens have eased,' said Derek Chan, head of research at Ricacorp Properties. The lower Hibor was attributed to higher liquidity entering the city's capital markets as the Hong Kong Monetary Authority began intervening in the currency market. Hong Kong pegged its dollar to the American currency in 1983, and in 2005 it instituted a trading band of HK$7.75 to HK$7.85 per US dollar. The HKMA intervenes in the open market when the local currency is expected to trade beyond its band.
