CBRE Announces Hong Kong Real Estate Market Outlook 2025

In 2024, Hong Kong’s commercial real estate market faced challenges across various sectors due to a slow economic recovery in mainland China and other factors. Despite this, investment deal flow and office leasing volume saw slight growth. Looking ahead to 2025, the momentum in the commercial real estate market is expected to improve further, influenced by lower interest rates and anticipated economic stimulus in mainland China, although challenges remain.
The demand for real estate in Hong Kong is predicted to increase in 2025 as financing costs decrease. However, this improvement is likely to be modest, primarily seen in increased transaction volumes. Landlords in the office and industrial sectors may struggle due to space availability issues, preventing them from gaining leverage in setting rents. Although higher tourist traffic may benefit food and beverage businesses, retail sales may not see a significant increase due to changes in consumption patterns. Retail leasing demand is predicted to remain stable, but high vacancy rates may put pressure on capital values in 2025, according to CBRE Hong Kong’s 2025 Market Outlook.
In terms of Grade A office space, leasing momentum slowed down in Q4 of 2024, but the overall year showed growth. Net absorption rates varied across submarkets, with Greater Central reporting a negative number. The vacancy rate increased in Q4, impacting rents, which saw a decline.
Ada Fung, Executive Director, Head of Advisory & Transaction Services – Office Services at CBRE Hong Kong, noted that the leasing activity for Grade A office space improved slightly in 2024, driven by new developments and lower office rents. Looking ahead to 2025, economic policies in China may boost IPO activities in Hong Kong, leading to growth in the financial sector. However, new supply may increase vacancy rates, and rents are expected to decline further in 2025.
Despite changes in consumption patterns affecting retail sales, the food and beverage sector remained relatively stable in 2024. Leasing demand in the retail sector was promoted by discounted rents, with new leasing volume registering a positive trend. However, challenges lie ahead as retail sales declined in 2024, and the sector faces pressure from factors such as high vacancy rates in the coming year.