HONG KONG, 24 April 2025 – Rents and capital values of almost all Hong Kong’s commercial and residential properties continued to fall in the first quarter of 2025, due to soft market demand and abundant supply, according to JLL's latest Preliminary Market Summary (1Q25) released today. Only luxury residential recorded rental growth over the past three months. However, office and retail leasing activities, together with residential sales transactions, remained strong.

Cathie Chung, Senior Director of Research at JLL, said: “Tariffs will have an impact on the macroeconomic landscape, but the magnitude will depend on how policy plays out. Any direct impact on Hong Kong's real estate market remains uncertain as the situation continues to evolve. In the short term, factors such as the ongoing tariff issue and unclear interest rate trends are likely to prompt investors to adopt a cautious, wait-and-see approach towards property investments. The industrial and logistics sectors may face increased pressure during this period.”

High street shops vacancy rates edged up slightly to 10.6% at the end of March from 10.5% at the end of 2024, while Prime shopping centres vacancy rate climbed to 9.2% from 9.1% last quarter.

Jeanette Chan, Senior Director of Retail at JLL in Hong Kong, said: “However, leasing momentum in core areas remained active, particularly in mass-market segments, fitness centres, and securities firms. Retail rents continued to dip as landlords in general offered discounts to attract and retain tenants amid sales headwinds. In the first quarter of 2025, rents slid by 0.8% q-o-q for High Street shops, and fell 0.3% and 0.2% for Overall Prime and Premium Prime shopping centres respectively.”

She expects rents of High Street shops and Prime shopping centres to decline by 0-5% this year. 

The leasing market continued to be dominated by renewals, while the investment market was driven by multiple disposals from primary new modern industrial projects. The overall vacancy rate of warehouses rose to 8.9% in the first quarter of 2025 from 7.9% at the end of 2024. Prime warehouse rents dipped by 0.9% q-o-q in the fourth quarter of 2024.

Ricky Lau, Head of Industrial of JLL in Hong Kong, said: “The vacancy rate for prime warehouse, which remained below 2% during the pandemic, has risen to over 8% by the end of March. Given Hong Kong’s total prime warehouse stock of over 60 million sq ft, this has translated to more than 5 million sq ft of vacant space. In recent years, demand for prime warehouses from both trade-related business and domestic markets has weakened, due to the ongoing US-China trade tensions and a slowing global economy. Hence, the vacancy rate for premium warehouses is expected to rise further, suppressing the rental rates,”

“While it is too early to predict the impact of US tariffs on Hong Kong’s warehouse and industrial properties at this stage due to high level of uncertainties, it is clear that the structural changes in the global economy are prompting the related industries, such as Hong Kong’s import-export trade, to transform in the medium to long-term. This process of searching for new directions will take time and inevitably face challenges,” he added.