Greater Central Grade A Office Rents Bottom Out, High Street Vacancies Continue to Fall

• Residential Market: Market sentiment turned more positive after the Chinese New Year as purchasing power continued to be released. Strong primary market home sales also drove secondary market activity, with Q1 residential transaction numbers surging 53% y-o-y to more than 18,650 units. Home prices across different segments recorded growth, reflecting that buyer appetite has yet to be impacted by geopolitical tensions in the Middle East.
• Grade A Office Market: Net absorption remained positive for the tenth consecutive quarter at 217,100 sq ft in Q1, mainly driven by leasing activity from the banking & finance sector. Greater Central rents have now bottomed out, strengthening by 5.5% q-o-q and supporting the city's overall office rents to increase by 2.4% q-o-q.
• Retail Market: Overall retail sales have continued to recover on the back of rising tourist arrivals. The average high street vacancy rate fell further to 4.2% in Q1, with tier-1 high streets in Causeway Bay and Central being fully occupied.

HONG KONG SAR - Media OutReach Newswire - 14 April 2026 - Global real estate services firm Cushman & Wakefield today held its Hong Kong Property Markets Q1 2026 Review and Outlook press conference. Despite ongoing geopolitical tensions in the Middle East, Hong Kong's residential market continued to perform resiliently, with both primary and secondary market transactions recording sustained growth. Total residential transaction numbers in Q1 rose by 9% q-o-q and 53% y-o-y. In the Grade A office market, net absorption reached 217,000 sq ft in Q1, driven by leasing demand from the banking & finance sector. However, rental performance continued to diverge between core and non-core submarkets, and the recovery was chiefly led by core areas. As for the retail sector, total retail sales continued to recover gently, supporting a further drop in the overall high street vacancy rate in Q1. Hong Kong Island outperformed the overall market, with rents in Central and Causeway Bay rising by 1.1% and 0.8% q-o-q, respectively. Grade A office leasing market: Tenth consecutive quarter of positive net absorption, Greater Central rents continue to pick up Sentiment in Hong Kong's Grade A office market remained positive in Q1 2026 on the back of sustained demand from the banking & finance and insurance sectors. The quarterly total new leased area reached 866,000 sq ft, with the banking & finance and insurance sectors accounting for more than 70%. Citywide net absorption fell q-o-q to record 217,100 sq ft but remained positive for the 10th consecutive quarter. Greater Central and Greater Tsimshatsui rental levels continued to pick up in Q1, by 5.5% and 0.4% q-o-q, respectively, driving the overall rental level up by 2.4% q-o-q to mark two consecutive quarters of rental growth for the first-time since Q1 2019. However, average rents in non-core submarkets continued to soften, suggesting the overall rental recovery is chiefly led by core areas in a two-tier market. As no new projects were completed in Q1, the overall availability rate remained broadly stable at around 20.0%, edging down by 0.3 percentage points q-o-q. John Siu, Managing Director, Hong Kong, Cushman & Wakefield,said, "Looking ahead, despite the recent stock market volatility, leasing demand from the banking & finance sector is expected to remain a key pillar this year, underpinned by expectations that Hong Kong will remain the leading global IPO market in 2026, with more than 400 companies in the listing pipeline up to the end of March. Geopolitical developments in the Middle East may also prompt investors to review asset deployment strategies and reallocate capital to Hong Kong, potentially supporting demand from banking & finance and wealth management-related occupiers. We have revised our 2026 rental forecast for Greater Central to +6% to +8%, from the previous range of +2% to +4%. In turn, the citywide Grade A office rent forecast is also revised to +1% to +3% y-o-y in 2026, compared with a previous forecast of ±1%." Retail leasing market: Retail sales demonstrate resilience with the overall high street vacancy rate falling further to a new post-pandemic low The Hong Kong retail market continued to demonstrate resilience in Q1 2026, supported by improved tourist arrivals and sustained local consumption sentiment, enabling the city's overall retail sales for the January to February 2026 period to pick up by 11.8% y-o-y to record HK$72.4billion. Among major retail categories, the Jewellery & Watches sector led the market recovery with a notable 27.8% y-o-y increase, followed by the Medicines & Cosmetics and Fashion & Accessories sectors at 8.3% and 6.6% y-o-y, respectively. This suggests the ongoing recovery and strengthening of tourist-oriented business sectors. The overall high street vacancy rate continued to trend...