Central is the most established business district in Hong Kong and is home to some of the world's largest financial institutions. It has excellent transportation links, with several MTR stations and bus routes, making it easy for employees to commute to and from work. Central also has a range of amenities, including shopping centers, restaurants, and bars.

Admiralty is a popular location for multinational companies and is home to several major banks and financial institutions. It has excellent transportation links and is connected to Central via a series of walkways and escalators. Admiralty also has a range of amenities, including shopping centers, restaurants, and bars.

Wan Chai is a popular location for startups and SMEs and is home to a number of co-working spaces. It has good transportation links and is connected to Admiralty via a series of walkways and escalators. Wan Chai also has a range of amenities, including shopping centers, restaurants, and bars.

Causeway Bay is a bustling shopping and commercial district in Hong Kong. It has excellent transportation links, with several MTR stations and bus routes. Causeway Bay is popular among retailers, but also has office spaces available for rent.

Tsim Sha Tsui is a popular location for businesses looking to establish a presence in Kowloon. It has excellent transportation links, with several MTR stations and bus routes, and is close to the cross-harbour tunnel. Tsim Sha Tsui is home to several major hotels and has a range of amenities, including shopping centers, restaurants, and bars.

Quarry Bay is a popular location for businesses in the creative industries, with several media and advertising companies based in the area. It has good transportation links, with several MTR stations and bus routes, and is home to several co-working spaces.

Kwun Tong is a growing business district in Kowloon, with several new office developments currently under construction. It has good transportation links, with several MTR stations and bus routes, and is home to several technology and innovation companies.

Cyberport is a technology-focused business park located on the south side of Hong Kong Island. It has excellent transportation links, with a dedicated MTR station, and is home to several technology and innovation companies. Cyberport also has a range of amenities, including a fitness center, restaurants, and a cinema.

• The office leasing market in Hong Kong remained weak in Q4 2024, with gross leasing volume declining by 26% q-o-q to 1.0 million sq. ft.

• Over 30% of activity occurred in buildings completed after 2021. Net absorption totaled 351,900 sq. ft., remaining positive for a fourth consecutive quarter, partly due to a series of transactions in recently completed buildings.

• Greater Central logged 13,800 sq. ft. of net absorption, mainly driven by improved occupancy in a recently completed building.

• Kowloon East was the best-performing submarket, registering 183,300 sq. ft. of net absorption for the quarter.

• New supply totaled 631,100 sq. ft., bringing total vacancy to 15.0 million sq. ft. or 16.9%.

• Vacancy in Central rose from 9.7% to 14.0%, the first time it has breached the 14% threshold since June 2004. The vacancy overhang meant rents fell 1.6% q-o-q, accelerating from the drop of 0.6% q-o-q seen in Q1 2024 and bringing the year-to-date decline to 2.1%.

• The economic backdrop was mixed, with expectations of interest rate cuts potentially supporting market sentiment but ongoing geopolitical tensions adding uncertainty.
  

Industry Commentary:

According to CBRE's Hong Kong Office MarketView Q4 2024 report, the overall Grade A office rental level softened further by 1.9% q-o-q. The report highlights that while new leasing momentum continues to pick up, any upturn in deal flow will be insufficient to reduce vacancy pressure. The banking & finance sector supported leasing momentum through Q4 to bring full-year 2024 Grade A office net absorption to 1.1 million sq ft, with flight-to-quality activity most prevalent.

JLL's Year-End Property Market Review and 2024 Forecast also indicates that the total surrendered office spaces in the five major office markets dropped 27.2% y-o-y in 2023, suggesting a slight improvement in the downsizing trend among corporates. Looking into 2024, JLL expects overall Grade A office rents to drop by 5 to 10% due to high vacancy rates and demand-side uncertainty.

Savills' Hong Kong Office Market Report for year end 2024 notes that the Hong Kong office market is grappling with oversupply and weak demand, with Grade A office vacancy rates rising across most sub-districts. The report forecasts a decline of 5 to 10% in office rent for 2024, attributing this to the rising relocation costs and a weak financial sector.

The reports from Colliers and Knight Frank from Q4 2024 have not shown any significant recovery in this context, with Colliers anticipating a decline of 7% for Grade A office rents in 2024 due to a tepid market condition and macroeconomic uncertainty.

These updates reflect the persistent challenges in the Hong Kong office leasing market as of Q4 2024, with a focus on the pressures from high vacancy rates and the cautious approach of businesses towards expansion or relocation.

Vacancy

• Q4 2024 witnessed a significant addition to office space, with new supply totaling 631,100 sq. ft., leading to a total vacancy space of 15.0 million sq. ft.

• High supply and constrained demand have driven the overall vacancy to a new peak, with an increase of approximately 1.9 million sq. ft. in vacant space since the start of the year.

• By the end of 2024, the vacancy rate climbed to 16.9%, the highest since records began, outstripping the previous peak of 15.1% in 2022.

• Most submarkets saw increased vacancy rates during Q4 2024. Notably, Kowloon East experienced a significant rise, with its vacancy rate jumping to 28.5%, up by 6.1-ppt from the previous quarter.

• Hong Kong East was again the exception, where the vacancy rate slightly decreased by 0.3-ppt to 12.9%.

Rents

• In Q4 2024, overall office rents decreased by 1.6% q-o-q, marking one of the steepest quarterly drops in recent years.

• All major submarkets saw reductions in rental rates during the quarter. Wan Chai/Causeway Bay had the most significant decline, with rents falling by 2.5% q-o-q.

• For the full year of 2024, Hong Kong East remained the weakest submarket, experiencing a yearly rental decline of approximately 8%.

• Greater Central also saw a considerable quarterly drop in rents, down by 1.9% q-o-q.

• Greater Tsim Sha Tsui experienced a rental decrease of 2.0% q-o-q, leading to an annual decline of 4.5% for 2024.

Amidst ongoing global economic challenges, Q4 2024 saw leasing momentum weaken further with a decline of 38% q-o-q to 661,000 sq. ft., which is one of the lowest quarterly volumes recorded in recent years. The total leasing volume for the year was 4.3 million sq. ft., showing a marginal growth of 6.3% y-o-y. The banking and finance sector remained a significant driver, accounting for 35% of the leasing volume. However, no major transactions like the UBS deal from previous years were reported for this period. 

Newly completed buildings in Q4 2024 experienced positive net absorption at around 24,900 sq. ft., a decrease from the previous quarters due to the cautious approach of tenants. The full-year net absorption for 2024 reached 956,000 sq. ft., the highest since 2018, reflecting some recovery in the market.

In Greater Central, net absorption was negative at -24,900 sq. ft. for Q4 2024, making it the only submarket with a negative annual figure, totaling -10,800 sq. ft. for the year. No significant new pre-leasing or transactions were highlighted for this area during the quarter. 

Hong Kong East continued to show resilience with a net absorption increase of 54,000 sq. ft. in Q4, finishing the year with a total of 195,000 sq. ft. This was driven by competitive leasing terms that continued to attract tenants to relocate or expand within the district.

Kowloon East was the standout performer, registering a positive net absorption of 231,200 sq. ft. for the year, with Q4 contributing 104,200 sq. ft. The completion of new developments like AIRSIDE in Kai Tak played a crucial role in this performance, attracting several firms to occupy whole floors.

Conversely, demand was notably weak in Tsim Sha Tsui and Wan Chai/Causeway Bay, where net absorption figures were -22,500 sq. ft. and -86,300 sq. ft., respectively, in Q4 2024. These core submarkets, together with Greater Central, contributed to a negative full-year net absorption of approximately -109,800 sq. ft. for the core areas.

In Q4 2024 and Q1 2025, the Hong Kong office rental market continues to evolve, shaped by several key trends:

• Flexible Workspaces: There has been a significant uptick in the demand for flexible workspaces, offering short-term and adaptable leasing solutions. This trend is particularly embraced by startups, small businesses, and even larger corporations looking to reduce long-term commitments amidst economic uncertainty. The flexibility allows companies to scale their office space up or down according to business needs, providing a cost-effective alternative in times of fluctuating demand.

• Coworking Spaces: The popularity of coworking spaces has only grown, with companies like WeWork and The Executive Centre continuing to expand or maintain their footprint in Hong Kong. The demand for these spaces has been bolstered by the need for environments that foster collaboration, networking, and innovation. The presence of such spaces now caters not only to startups but also to professionals seeking a dynamic work environment outside of traditional office settings.

• Impact of the COVID-19 Pandemic: Although the initial shock of the pandemic has subsided, its long-term effects on office space utilization persist. Many companies have adopted hybrid work models, reducing the need for large, permanent office spaces. This shift has led to a sustained preference for smaller or more flexible spaces where employees can work part-time or occasionally. The embrace of remote work has also meant that businesses are more cautious about committing to long-term leases, favoring spaces that can accommodate fluctuating work patterns or sudden shifts in workforce size.

These trends indicate a market that's adapting to new norms in work culture, with an emphasis on flexibility, adaptability, and the integration of technology to support both remote and in-office work scenarios.

Here are some key trends in wealth management for 2025, informed by recent developments and insights from the industry:

• Digital Transformation and AI Adoption: Wealth management firms are increasingly turning to digital tools and AI to enhance client services. This includes personalized investment advice, automated financial planning, and sophisticated risk analysis. AI and machine learning algorithms are being used to provide more tailored investment strategies and improve operational efficiency.

• ESG Investing: Environmental, Social, and Governance (ESG) criteria continue to gain traction. Investors, particularly the younger generations, are more inclined towards sustainable and ethical investing. Wealth managers are expanding their offerings to include ESG-focused products, with a strong emphasis on impact investing where returns are measured not just in financial terms but also by the positive impact on society and the environment.

• Increased Demand for Customization: Clients are seeking more bespoke solutions tailored to their personal circumstances, values, and long-term goals. This has led to a rise in direct indexing, where investors can customize their portfolios to include or exclude specific companies or sectors based on personal ethics, risk tolerance, or financial strategy.

• Focus on Wealth Transfer and Succession Planning: With a significant amount of wealth expected to be transferred between generations, wealth management services are focusing on legacy planning. This involves not just transferring assets but also educating the next generation about wealth management, philanthropy, and family governance.

• Rise of Family Offices: There's a growing trend towards establishing family offices in Hong Kong, driven by both local and international wealth. Family offices provide a centralized approach to managing wealth, offering services like investment management, tax planning, and estate planning, tailored to the unique needs of ultra-high-net-worth individuals and families.

• Cross-Border Wealth Management: With Hong Kong's strategic position as a financial hub, there's an increased focus on cross-border wealth management. This involves navigating complex international tax laws, currency management, and investment diversification across different markets, particularly with the Greater Bay Area initiatives.

• Regulatory Environment: The wealth management sector in Hong Kong is adapting to a changing regulatory landscape, focusing on investor protection, transparency, and compliance with global standards like the Common Reporting Standard (CRS) to combat tax evasion.

• Technological Security and Privacy: As wealth management becomes more digital, there's a heightened emphasis on cybersecurity and privacy. Wealth managers are investing in secure platforms and educating clients about cyber risks to protect their financial data.

• Integration with Fintech: Wealth managers are partnering with or integrating fintech solutions to offer more innovative services, from blockchain-based asset management to digital wallets for ease of transactions.

• Client Experience and Education: There's a shift towards providing an enhanced client experience through better digital interfaces, educational content, and personalized communication. This involves using technology to deliver insights and educational materials directly to clients, helping them make informed decisions.

These trends are shaping the wealth management industry in Hong Kong, making it more client-centric, technologically advanced, and globally integrated.

The office rental market in Hong Kong is highly competitive, with many local and international players. The major landlords and developers include Sun Hung Kai Properties, Swire Properties, Henderson Land Development, and Hong Kong Land. Other players include New World Development, Wheelock Properties, and Wharf Real Estate Investment Company. These companies offer a wide range of office spaces, from Grade A to Grade B and C, in various locations across Hong Kong.

Types of Office Property Ownership in Hong Kong

Office properties in Hong Kong can be owned in different ways, including by Portfolio Landlords, Single Ownership, and Strata-Title.

Portfolio Landlords often own clusters of buildings with a mix of retail and commercial spaces. They are usually involved in property development and manage the building in-house.

Single Ownership properties are typically owned by private investors, institutions, or large organizations. They often hire a third-party specialist to manage the property.

Strata-Title properties have multiple landlords who own office suites or floors in a building. The property's communal areas, including the exterior, are managed by an external company. Although acquiring space in a strata-title property is similar to other commercial spaces, expansion plans may be challenging due to sale and redevelopment clauses.