JLL: Hong Kong's Grade A office rental prices fell by about 5% for the whole year.

Jones Lang LaSalle (JLL) Senior Director of Research, Cho Yuk-ju, stated that as tenants become more active, the rental atmosphere of Hong Kong's office market has improved in the third quarter. The financial, wealth management, and professional services sectors are driving demand for high-quality office spaces in the core areas, while the resurgence of the IPO market is further boosting leasing performance. Some tenants are taking advantage of attractive rental levels to upgrade their office spaces or consolidate their business operations. However, the market still faces pressure from high supply and high vacancy rates, and Jones Lang LaSalle (JLL) still expects prime office rents in Hong Kong to fall by about 5% for the full year. According to the market overview report for the third quarter of 2025 published by Jones Lang LaSalle (JLL), Hong Kong's office market saw a significant rebound in the third quarter of 2025, mainly driven by IPOs and wealth management-related tenants leading to an increase in leasing demand. The residential market remains resilient, supported by stable user demand and selective investment activities. Furthermore, retail leasing activity has slightly improved with the support of lower rental levels. With signs of stable retail sales and high yields, investor interest in retail properties is gradually increasing. In the industrial property market, although the leasing market remains subdued, the investment market improved during the quarter, primarily driven by user demand and redevelopment potential. Cho Yuk-ju noted that major Hong Kong banks followed the United States in cutting interest rates in September, which helped stabilize the overall market sentiment and signaled a reduction in Hong Kong's property market interest rates. The residential market is expected to benefit first from the lower financing costs brought by the rate cut, but with bank credit still tight, the impact of the rate cut on the overall commercial real estate market is relatively limited. The stabilization of Hong Kong's office market in the third quarter of 2025 was mainly driven by actual leasing demand rather than the interest rate cut. In the third quarter of 2025, the overall office market gradually warmed up, recording a net absorption of 646,000 square feet, a quarter-on-quarter rebound of 137.5%, reversing the weak performance in the first half of the year. Despite new projects being completed during the quarter, the overall vacancy rate improved from 13.6% in June to 13.4% in September. The vacancy rates in Central and Kowloon East decreased by 0.8 percentage points each, while the rates in Wan Chai/Causeway Bay increased by 2.5 percentage points to 12.0%. Overall office rents in Hong Kong fell by 0.8% quarter-on-quarter, with all submarkets seeing rental declines. In particular, Central rents fell by 0.3%, while the largest decline was seen in Hong Kong Island East, dropping by 3.2%.