The overall market's vacancy rate was 17.2% in September, slightly below a high of 17.5% in May. A further increase in the vacancy rate to a record high of over 18% could happen by year-end, mainly due to the completion of Sun Hung Kai's International Gateway Centre (IGC). Preleasing progress of new office space is improving on a flight-to quality, potentially denting occupancy rates of older buildings.
Hong Kong's office rental decline is poised to moderate to about 5% in 2026 with a pickup in demand driven by a flight to quality, as seen by UBS, Jane Street, Point72, Alibaba and Ant Group. Yet vacancy will hit a new high with the completion of Sun Hung Kai's new office towers in West Kowloon which will encourage tenants to expand at low rents.
Hong Kong office rents have scope to drop about 5% in 2026, after falling around 7% in 2025. A major driver will be a recent pickup in leasing momentum, particularly in the Central district, given strong IPO activity. Positive net take-up in 3Q reached 430,000 sq ft, including 190,000 sq ft in Central, which was the second-highest level in a decade.
