2025-08-14-莱坊-Hong_Kong_Quarterly_Hong_Kong_Market_Report_2025_Q2页_9页_1mb

Hong Kong Market Report Q2 2025 Summary

Core Content Overview

This report provides a comprehensive analysis of the performance of Hong Kong's office, residential, and retail property markets in Q2 2025, highlighting key trends, transaction activity, and future outlooks.

Office Market Highlights

• Market Divergence: The office leasing markets in Hong Kong Island and Kowloon are showing different trends, with Hong Kong Island experiencing stronger demand.
• Key Transactions:
  • Jane Street secured a major lease at Harbourfront Site 3 Phase 1, covering 223,000 sq ft, with handover expected in early 2027.
  • Other notable transactions include Cathay United Bank leasing 36,000 sq ft at One Causeway Bay, Hong Kong Jockey Club leasing 44,000 sq ft at Lee Garden One & Two, and BOOTS leasing 16,740 sq ft at HSBC Centre Tower 1.
• Vacancy and Rent Trends:
  • Total Grade-A office vacancy rate is 14.8%.
  • Average net unit rent is HK$49.5 per sq ft.
  • Quarterly take-up was +103,484 sq ft.
• Sectoral Demand:
  • Service-oriented firms, particularly in banking, finance, and professional services, are driving demand in Central.
  • Legal firms are emerging as a new demand driver, especially for PRC companies seeking IPOs.
• Supply and Demand Dynamics:
  • The Kowloon leasing market faces challenges due to global uncertainties affecting supply chain and trading sectors.
  • Tsim Sha Tsui saw a modest rental growth of +0.7% QoQ.
  • Landlords are using various incentives to attract tenants, including flexible terms and improved amenities.

Residential Market Highlights

• Sales Activity:
  • Total residential transactions in June 2025 rose to 5,955 units, a 17% MoM increase.
  • Q2 total transactions reached 16,754 units, a 37% increase over Q1.
• Market Drivers:
  • Improved mortgage affordability, following a decline in HIBOR, has supported sales.
  • Properties priced between HK$12-15 million are the most sought-after, particularly by families and home upgraders.
• Notable Projects:
  • Deep Water Pavilia (Wong Chuk Hang) recorded a 83% sales rate with units sold at HK$50,000 per sq ft.
  • Sierra Sea (Phase 1B) in Ma On Shan had a 97% sales rate.
• Leasing Trends:
  • The leasing market saw a 0.7% MoM increase in May and a 1.4% YTD increase.
  • Demand is led by non-local professionals and students, with a growing influx from non-finance sectors.
  • We expect increased leasing activity from young professionals in Q3, especially those relocating from the UK and Singapore.
• Market Outlook:
  • Both luxury and mass-market rental sectors are expected to grow by 3-5% this year.
  • Sales market recovery is anticipated, but price trends may remain subdued in the secondary market.

Retail Market Highlights

• Sales Recovery:
  • Retail sales in May 2025 increased by 2.4% YoY, ending a 14-month decline.
  • Total sales reached HK$31.3 billion, supported by mainland visitor influx during "golden week."
• Market Polarisation:
  • The luxury segment remains subdued, with a 3.2% YoY decline in May for jewellery, watches, and valuable gifts.
  • Budget retail options are gaining traction, especially among local residents who increasingly shop in Shenzhen.
• Tourism Growth:
  • May 2025 saw 4.08 million visitor arrivals, a 20% YoY increase.
  • Mainland visitors accounted for 75% of total arrivals, driven by events like concerts and sporting events at Kai Tak Sports Park.
• Consumer Trends:
  • Local consumer demand is weak, with reduced willingness to spend.
  • Mainland visitors are shifting focus away from luxury spending.
  • Retailers are adopting more conservative expansion strategies.
• Future Outlook:
  • Retail rental levels are expected to remain stable throughout 2025.
  • Gen Z is becoming a key driver of luxury consumption, valuing sustainability, brand values, and pricing transparency.

Key Insights

• Office Market:
  • Hong Kong Island is showing positive momentum, while Kowloon faces continued challenges.
  • Flight-to-quality spaces are in demand, with Central and Admiralty seeing higher net effective rents.
• Residential Market:
  • Sales are rebounding due to improved mortgage conditions and incentives.
  • Leasing activity is outperforming, with demand from non-local professionals and students.
• Retail Market:
  • Retail sales show tentative recovery, but luxury consumption remains weak.
  • The retail sector is polarised, with budget options gaining popularity.
  • Tourism is a key driver, but local consumer spending is still subdued.

Summary Table