This report analyses the performance of Hong Kong’s office, residential and retail property markets. 

O F F I C E
Lower rents attract increasing presence of Chinese Mainland tenants.

Hong Kong Island Grade A office rentals extended their downward trend in November, albeit with a less significant rental drop than in the previous quarters. Rents in the Central
and Admiralty CBD fell by 1.2% and 2.3% MoM respectively, while the submarkets remained under pressure, as demand was weak.

Multinational companies have adopted a wait-and-see approach regarding their real estate plans amid the economic recession, while many Chinese Mainland tenants have taken advantage of the downbeat environment to expand their presence in Hong Kong. We note that the proportion of Mainland tenants in Central increased from 5% in 2008 to
34% at present. The majority of them are in the banking and finance sector, accounting for nearly 30% of new lettings in 2020 and growing tenfold in the past decade.

Stepping into 2021, landlords especially in the core districts are expected to continue to offer competitive packages to retain cost-conscious tenants and fill vacant space. We expect rents to fall by 5–10% in core districts and decline by 0–3% in the decentralised areas in the coming year.