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Hong Kong Office Market Forecast 2023

February 2023

Hong Kong Office Market Update Sep 2020

After 3 years of business disruption, Hong Kong SAR finally has an opportunity to recover from a sluggish leasing sentiment in Year 2022 to a positive tone in Year 2023.

As mainland China shifts away from its zero-covid policy and re-opens, office demand from Chinese enterprises is likely to pick up its pace in the city gradually. However, on the other hand, global geopolitical tension and a potential global recession will continue to create global macroeconomic risks.

While business activity in Hong Kong has largely returned to normal, other ongoing challenges such as global inflation, higher interest rates which all lead to a result of higher financing costs will ensure multinationals stay cost cautious still in Year 2023. Yet, improving business sentiment and travel normalisation will accelerate office leasing momentum in 2023 and thus we may expect a small rent increase of about 3% this year in CBD area. On the other hand, adding to the 4.1 million sq. ft. of new stock in 2022 is another 2.7 million sq. ft. pipeline supply in 2023, 80% of this combined 6.8 million sq. ft. of new spaces is in decentralised locations. Therefore, with cost control set to remain a top priority for most companies and upward pressure on vacancy set to be noticeable, rents will somewhat decline in those submarkets area by a further 0%-5% in 2023.

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