Prime Central Office Rents Show Signs of Stabilization While High Street Retail Rents Record Narrower Decline

• With the support of improving market sentiment and the U.S. Federal Reserve's rate cut, Hong Kong residential transaction numbers trended upwards in Q3 amid the current consolidation phase. Total residential transactions for the Q3 period reached 16,700 units, up 63% y-o-y, while home prices remained stable throughout the quarter.
• The Grade A office market recorded net absorption of 401,000 sq ft in Q3, the highest level since Q2 2019. Overall office rents declined by 0.8% q-o-q, although Prime Central subdistrict rents posted a modest rise of 0.6% q-o-q.
• The average retail high street vacancy rate in core districts dropped to 8.3% in Q3, with leasing activities most active in Causeway Bay and Mongkok. Overall high street retail rents gradually stabilized within a narrow range of ±1% q-o-q, with the full-year rental change now forecast in a range of -1% to -2% y-o-y.

HONG KONG SAR - Media OutReach Newswire - 8 October 2025 - Global real estate services firm Cushman & Wakefield today held its Hong Kong Property Markets Q32025 Review and Outlook press conference. The residential market sustained momentum in the quarter, supported by lower mortgage rates, a buoyant stock market, and developers' active launches of primary market home sales at competitive prices. Monthly residential transactions exceeded 5,000 units during the quarter, bringing total residential sales in Q3 to 16,700 units. In the Grade A office sector, boosted by a recovery in stock market confidence and initial public offering (IPO) activity, quarterly net absorption and new lease activities remained robust, with the Greater Central district outperforming. Overall office rents remained under pressure due to high availability, but Prime Central subdistrict rents showed early signs of recovery and edged up. As for the retail sector, overall retail sales experienced some stabilization in the first two months of Q3, with an uptick of 2.8% y-o-y through July and August, while the overall year-to-date decline in retail sales narrowed. Average high street vacancy levels in core retail districts fell during the quarter, accompanied by mild q-o-q declines in core area high street rents. Grade A office leasing market: Leasing demand and momentum accelerated, Prime Central sub-district rents stabilized Leasing demand in the Hong Kong Grade A office market saw accelerated momentum through Q3 2025, boosted by a recovery in stock market confidence and initial public offerings (IPOs). The total new leased area in Q3 reached 1.13 million sf, pushing the total for the first three quarters of 2025 past 3.37 million sf, surpassing the full-year total for 2024. The overall Hong Kong Grade A office rental level decline narrowed to -0.8% q-o-q in Q3. The Prime Central subdistrict outperformed the overall market to achieve positive rental growth of 0.6% q-o-q. Quarterly net absorption reached 401,000 sq ft, the highest level since Q2 2019 and bringing the overall office availability rate down to 19.2%, despite the addition of 463,000 sf of new supply at the One Causeway Bay property completed in the quarter. John Siu, Managing Director, Hong Kong, Cushman & Wakefield,said, "The Grade A office market continued to experience active leasing demand in Q3, chiefly due to recovery in the financial sector and IPO activity, in turn driving leasing demand both from upstream and downstream of related industries. As one of the most preferred submarkets for banking and financial institutions, Greater Central accounted for around 30% of the total new leased area in the quarter, supported by new set-up and relocation demand from hedge funds and wealth management firms, and demonstrating the expansion strategies adopted by the high-end financial services industry. "Notably, the Greater Central office rental level decline narrowed in Q3, with signs of stabilization between August and September. Prime Central subdistrict office rents edged up by 0.6% q-o-q, suggesting a steady recovery in demand for premium office space. We believe that occupancy levels and rental performances between the highest-quality offices and other lower-tier spaces will increasingly diverge. With leasing sentiment in the first three quarters of 2025 demonstrating greater resilience than previously anticipated, we have now revised our full-year 2025 forecast for overall Grade A office rents to decline in a milder range of approximately 4% to 6%." Retail leasing market: Retail sector showed signs of stabilization, with the overall average vacancy rate falling and rental level declines narrowing further Hong Kong's overall retail sales experienced some stabilization in the first two months of Q3, with an upturn of 2.8% y-o-y through July and August. In August alone, retail sales grew by 3.8% y-o-y, marking the fourth consecutive month of growth and suggesting...