Embracing new opportunities in Hong Kong office market

As we look ahead to the future of Hong Kong’s office market, the discussion has moved beyond near-term vacancies and rental corrections and towards the long-term forces reshaping the city’s commercial landscape. Downside risks remain, including geopolitical tensions and structural shifts in demand, although these must be put into context. At the same time, the market is at a crucial juncture, as evidenced from the potential recovery of the financial sector to the increasing presence of institutional players in the private market. Asset upgrading is accelerating as tenants prioritise quality alongside cost savings, while policy-driven ‘green shoots’ offer cautious optimism. In this blog, we examine the key themes defining Hong Kong’s office market in 2025 and beyond.

Office market vacancy trends in Hong Kong reveal distinct patterns across submarkets and building age segments. The Kowloon East submarket exhibits more vacant spaces in newer buildings (under 10 years old), while Central, Wanchai/Causeway Bay, and Tsimshatsui experience greater vacancies in older buildings (over 30 years). Hong Kong East also shows notable vacancies in the 21–30-year age bracket. To maintain occupancy and protect asset values, landlords should prioritise strategic upgrades, such as renovations, technological enhancements, or ESG-aligned improvements. These upgrades will help meet the evolving tenant expectations for modern, efficient workspaces.

Figure 1: Total vacancy by submarket and age group

Source: JLL Research, 1Q25

The office market continues to demonstrate resilience, particularly through the active participation of mainland Chinese enterprises and government-related entities in both leasing and sales. Recent examples include The Hong Kong Mortgage Corporation and The Financial Secretary Incorporated securing new lettings on the Kowloon side. Simultaneously, Li Ning's acquisition of an en-bloc building in Fortress Hill, along with HKEX’s purchase of office floors from Hongkong Land in core Central, and the SFC’s acquisition at One Island East in Quarry Bay, indicate strong institutional confidence from key players in the market's potential for growth.

According to the latest forecasts by Bloomberg Intelligence, Hong Kong might overtake Switzerland as the world’s largest cross-border wealth hub as early as the end of 2025. Furthermore, the city's diversification into new economic sectors is evident through its recognition as a leading region in the Crypto Friendly Cities Index 2025 and its ranking among the Best Science and Technology Clusters in the Global Innovation Index 2024. These developments in financial services, wealth management, fintech, and innovation will boost demand for quality office space from expanding financial institutions, professional service firms, and technology enterprises.

Nevertheless, US President Trump’s recent announcement of a broad-based tariff regime has introduced downside risks to commercial real estate demand. Potential impacts include increased economic uncertainty, which could slow decision-making processes, along with headcounts reductions across significantly affected industries such as logistics, trading, and manufacturing. We may also see a slowdown in leasing activity in the coming months as occupiers re-evaluate their real estate plans in the light of these evolving circumstances.

However, those developments may also bring new business opportunities. Amid increasing geopolitical tensions and trade disputes, many mainland Chinese companies are seeking to hedge against US-related risks by turning to the Hong Kong IPO market. The case of TikTok, which faced regulatory scrutiny in the US, exemplifies this shift. Hong Kong offers an ideal platform for these companies to attract offshore capital. A recent example is the leading Chinese EV battery maker CATL's successful IPO in Hong Kong, which not only underscores the region’s appeal for mainland firms but also highlights the growing trend of companies opting for Hong Kong listings as a safeguard against potential geopolitical volatility.