The View | A U-shaped rebound of Hong Kong’s commercial property? Unlikely

When predicting and assessing the shape of recoveries, analysts have made use of letters of the alphabet. A V-shaped recovery denotes a sharp rebound following a steep downturn. If the recovery takes a U-shape, however, both the trough of the downturn and the recovery last much longer. An L-shaped recovery signifies that activity never recovers meaningfully.

Yet while the recovery in the territory’s capital markets is an emphatically V-shaped one, Hong Kong’s commercial real estate market remains mired in a deep downturn. That is not to say that there are no green shoots or pockets of resilience. “Buoyed by easing interest rates and a more stable macroeconomic outlook, activity across [the] office, retail, industrial and investment sectors is picking up, albeit unevenly,” CBRE said in a presentation on October 20.

In the office sector, net take-up in the third quarter reached 691,800 square feet (64,270 square metres), the highest quarterly total since the third quarter of 2018, data from CBRE shows. In fact, all major submarkets recorded positive net absorption for the first time since the second quarter of 2015.

JLL said leasing demand from financial institutions and professional services firms has been given a fillip by Hong Kong’s hefty IPO pipeline and rising wealth management activity, benefiting premium office space in core locations.

Moreover, the peak of the supply boom – just over 7 million sq ft of Grade A space was added to the market between April 2022 and March 2025 – has almost passed. “New supply in 2026-28 will be just 60 per cent of the level in 2023-25, providing a space digestion period for the market,” said Marcos Chan, head of research at CBRE in Hong Kong.