JLL: It is expected that the prices of small and medium-sized residential buildings in Hong Kong will drop by 5% this year, while the decline in luxury homes will be adjusted to 5%-10%.

Jones Lang LaSalle (JLL) has released a report titled "Hong Kong Real Estate Market Review and Outlook for the First Half of 2025." Jones Lang LaSalle (JLL) Hong Kong Chairman Paul Tsang said that he anticipates a 5% decrease in prices for medium-sized residential properties this year, driven by the continuous increase in non-local professionals and students entering the market. Residential rents are expected to reach a historical high due to an increase in commercial properties being sold off due to financial difficulties, affecting owners of luxury properties. As a result, the prediction for a decrease in luxury property prices has been adjusted from 5% to a range of 5% to 10%. Tsang mentioned that in the next six months, developers will need to continue to offer discounts on new launches to ensure a speedy turnover, and if the market believes that HIBOR will stay below 2% in the long term, a low interest rate environment is expected to boost residential sales. The report points out that in the first half of 2025, the office market sentiment improved, with increased leasing and negotiation activities in prime office locations, especially in Central. Despite an overall vacancy rate reaching a high of 13.6%, vacancy rates in Wan Chai/Causeway Bay and Tsim Sha Tsui have decreased to 9.5% and 7.9% respectively. In the first half of the year, the market recorded a positive net absorption of 130,700 square feet, primarily driven by increased transactions in major areas such as Central, Wan Chai/Causeway Bay, and Tsim Sha Tsui, reflecting an increased interest from tenants in quality office spaces in core areas. Sam Gourlay, head of commercial department at Jones Lang LaSalle (JLL) Hong Kong, said that he expects rents for high-quality office buildings in Central to stabilize by the end of the year due to sustained interest from tenants in landmark buildings. Despite improvements in lease activity expected in the second half of the year, high vacancy rates will persist due to new supply and available floor areas. Overall office rents are expected to decrease by approximately 5% in 2025. Data from Jones Lang LaSalle (JLL) shows that as of the end of June, street shop vacancy rates in core areas remain at 10.5%, while vacancy rates in high-quality shopping malls have risen to a new high of 10.5%, primarily due to increased new supply and added vacant floor spaces in existing malls. Yvonne Chan, senior director of shop leasing at Jones Lang LaSalle (JLL) Hong Kong, stated that the completion of approximately 600,000 square feet of new retail spaces in the second half of 2025 will put upward pressure on the vacancy rates in high-quality shopping malls. It is predicted that rents for street shops and high-quality shopping malls in core areas will decrease by 5% to 10% this year.