Reports of brisk weekend home sales show the housing market will outpace offices in recovery going into 2025, consultancies say
Hong Kong’s office market is likely to trail other segments in terms of recovery as interest-rate cuts and easier mortgage financing rules drive bigger interest and deals in the residential and retail properties, analysts said.
Office vacancy rates continued to worsen last month in more business districts in the city including Central, Wan Chai, Causeway Bay and Tsim Sha Tsui, a property agency said in its latest report. Rents fell by 1.1 per cent from August, the property consultancy said.
“It would take some time to climb out of the trough, especially now enterprises are still finding it challenging to expand [their office space],” said an agent.
The market is facing an oversupply situation as vacancy rates hold near all-time highs, according to another property agency. Hong Kong developers and landlords are set to add about 3 million square feet of new office space next year, the firm forecasts, compounding a glut.
New buildings set to come on the market next year include the 2.1 million sq ft International Gateway Centre in Tsim Sha Tsui by Sun Hung Kai Properties, the 410,400 sq ft One Causeway Bay project by Mandarin Oriental and Hongkong Land, and the 310,700 sq ft project of SEA Holdings in Kowloon East.
This is likely to make the vacancy rates worse by the end of 2025, while rents are will be depressed by another 5 per cent, according to the second agency.
“We forecast grade A office rents will decline by 8 per cent in 2024, followed by a similar decline in 2025,” said an agent. The tenants’ market is likely to persist well into 2025, the agent added.
Reports of brisk weekend home sales are underpinning optimism in the residential property market. Apart from rate cuts, policy measures to spur demand have also helped.
Buyers of homes and commercial properties are now allowed to borrow up to 70 per cent of their property’s value. The debt-servicing ratio was also raised to 50 pe rcent from 40 per cent for both residential and non-residential properties.
Recent launches have received a good response, according to agents. All 198 units at the Echo House project in Cheung Sha Wan were fully sold out on the first day of the launch. The project is jointly developed by Chinachem Group and the Urban Renewal Authority.
“The recent rate cut and cheaper prices have improved home affordability and are expected to stimulate a recovery in home buying sentiment in the primary market among local end users,” the agency said. China’s policy stimulus could create a wealth effect, potentially sustaining demand from mainland buyers, the agency added.
Hong Kong’s retail properties have attracted some big-name tenants, even though sales have remained weak following a 10.1 per cent drop in August from a year earlier. Seoul-based sportswear brand Fila leased several shop lots totalling 5,643 sq ft for HK$1.8 million (US$232,000) a month.
A recovery in global tourism, coupled with measures to boost the influx of talents and loosen visa requirements, are likely to support a healthier retail environment in 2025, another agent said. Rents for high street shops are expected to increase by 5 per cent, the agent added.
China will resume its multiple-entry Individual Visit Endorsements plan from Shenzhen, expanding the “one trip per week” travel to more mainland cities.
Another move to relax the multiple-entry visas for Southeast Asian travellers could potentially “bring more high-spending visitors to the city and benefit retail and hospitality sectors in core districts,” the agent said.
