Greater Central Grade A Office Rents Bottom Out, High Street Vacancies Continue to Fall

• Residential Market: Market sentiment turned more positive after the Chinese New Year as purchasing power continued to be released. Strong primary market home sales also drove secondary market activity, with Q1 residential transaction numbers surging 53% y-o-y to more than 18,650 units. Home prices across different segments recorded growth, reflecting that buyer appetite has yet to be impacted by geopolitical tensions in the Middle East.
• Grade A Office Market: Net absorption remained positive for the tenth consecutive quarter at 217,100 sq ft in Q1, mainly driven by leasing activity from the banking & finance sector. Greater Central rents have now bottomed out, strengthening by 5.5% q-o-q and supporting the city’s overall office rents to increase by 2.4% q-o-q.
• Retail Market: Overall retail sales have continued to recover on the back of rising tourist arrivals. The average high street vacancy rate fell further to 4.2% in Q1, with tier-1 high streets in Causeway Bay and Central being fully occupied.

HONG KONG SAR – Media OutReach Newswire – 14 April 2026 – Global real estate services firm Cushman & Wakefield today held its Hong Kong Property Markets Q1 2026 Review and Outlook press conference. Despite ongoing geopolitical tensions in the Middle East, Hong Kong’s residential market continued to perform resiliently, with both primary and secondary market transactions recording sustained growth. Total residential transaction numbers in Q1 rose by 9% q-o-q and 53% y-o-y. In the Grade A office market, net absorption reached 217,000 sq ft in Q1, driven by leasing demand from the banking & finance sector. However, rental performance continued to diverge between core and non-core submarkets, and the recovery was chiefly led by core areas. As for the retail sector, total retail sales continued to recover gently, supporting a further drop in the overall high street vacancy rate in Q1. Hong Kong Island outperformed the overall market, with rents in Central and Causeway Bay rising by 1.1% and 0.8% q-o-q, respectively.

Grade A office leasing market: Tenth consecutive quarter of positive net absorption, Greater Central rents continue to pick up

Sentiment in Hong Kong’s Grade A office market remained positive in Q1 2026 on the back of sustained demand from the banking & finance and insurance sectors. The quarterly total new leased area reached 866,000 sq ft, with the banking & finance and insurance sectors accounting for more than 70%. Citywide net absorption fell q-o-q to record 217,100 sq ft but remained positive for the 10th consecutive quarter.

Greater Central and Greater Tsimshatsui rental levels continued to pick up in Q1, by 5.5% and 0.4% q-o-q, respectively, driving the overall rental level up by 2.4% q-o-q to mark two consecutive quarters of rental growth for the first-time since Q1 2019. However, average rents in non-core submarkets continued to soften, suggesting the overall rental recovery is chiefly led by core areas in a two-tier market. As no new projects were completed in Q1, the overall availability rate remained broadly stable at around 20.0%, edging down by 0.3 percentage points q-o-q.

John Siu, Managing Director, Hong Kong, Cushman & Wakefield,said, “Looking ahead, despite the recent stock market volatility, leasing demand from the banking & finance sector is expected to remain a key pillar this year, underpinned by expectations that Hong Kong will remain the leading global IPO market in 2026, with more than 400 companies in the listing pipeline up to the end of March. Geopolitical developments in the Middle East may also prompt investors to review asset deployment strategies and reallocate capital to Hong Kong, potentially supporting demand from banking & finance and wealth management-related occupiers. We have revised our 2026 rental forecast for Greater Central to +6% to +8%, from the previous range of +2% to +4%. In turn, the citywide Grade A office rent forecast is also revised to +1% to +3% y-o-y in 2026, compared with a previous forecast of ±1%.”

Retail leasing market: Retail sales demonstrate resilience with the overall high street vacancy rate falling further to a new post-pandemic low

The Hong Kong retail market continued to demonstrate resilience in Q1 2026, supported by improved tourist arrivals and sustained local consumption sentiment, enabling the city’s overall retail sales for the January to February 2026 period to pick up by 11.8% y-o-y to record HK$72.4billion. Among major retail categories, the Jewellery & Watches sector led the market recovery with a notable 27.8% y-o-y increase, followed by the Medicines & Cosmetics and Fashion & Accessories sectors at 8.3% and 6.6% y-o-y, respectively. This suggests the ongoing recovery and strengthening of tourist-oriented business sectors.

The overall high street vacancy rate continued to trend downwards, standing at 4.2% in Q1, marking a new low since the pandemic. Across core retail districts, Hong Kong Island outperformed Kowloon, with high street shops in Causeway Bay and Central within our basket fully leased during the quarter. The vacancy rate in Tsimshatsui also dropped further to 7.1% in Q1, while Mongkok remained stable at 6.1%.

As for high street retail rental levels, recovery was also led by Hong Kong Island, with Central and Causeway Bay recording q-o-q increases of 1.1% and 0.8%, respectively. Mongkok high street retail rents picked up by 0.6% q-o-q, while a more affordable, mass-market tenant mix prompted Tsim Sha Tsui rental levels to move down by 1.1% q-o-q (Chart 2). Regarding the F&B sector, high availability continued to weigh on rents across districts, with Causeway Bay, Central, Tsimshatsui and Mongkok all recording declines within 1% q-o-q.

John Siucommented, “Retail leasing sentiment across districts remained positive in the first quarter, particularly on Hong Kong Island side. We anticipate Central and Causeway Bay to lead the rental level recovery, given Causeway Bay has continued to attract young locals and tourists, while Central has been benefitting from relatively stable high-end local consumption. On Kowloon side, Tsimshatsui and Mongkok are expected to see gradual absorption of vacant spaces if landlords are willing to offer reasonable asking rents. Looking ahead, the city’s retail market is poised for a positive recovery in 2026, yet we anticipate a gradual rental recovery rather than a rapid rebound. Supporting factors, including the wealth effect from the housing price recovery, are set to lift local consumption sentiment. The ongoing mega-event campaign, coupled with a stronger renminbi, is also expected to draw a promising influx of tourists, supporting greater foot traffic and tourist spending on high streets. Nevertheless, given the shift in consumption patterns and the entry of more affordable brands into high streets, overall rents are unlikely to see a rapid rebound in the near term. We maintain our forecast of a 2% to 3% increase in overall high street retail rents for 1H 2026.”

Residential market: Market transactions remain active amid geopolitical tensions in the Middle East, supporting home price rises across market segments

The Hong Kong residential market continued to gain momentum in Q1, driven by strong sales of primary projects and more active participation from potential buyers in the secondary market who have expedited purchase decisions. The ongoing geopolitical tensions in the Middle East have yet to exert a significant impact on Hong Kong residential market activity. Since March last year, the monthly number of residential sales and purchases agreements has exceeded 5,000 for 13 consecutive months, with February 2026 reaching close to 6,700 units. Total residential transactions in Q1 recorded approximately 18,650 units, up 53% y-o-y and 9% q-o-q (Chart 3). Strong sales at new launches saw primary market transactions take a 30% share of total transactions in the quarter.

Edgar Lai, Senior Director, Valuation and Advisory Services, Hong Kong, Cushman & Wakefield, highlighted, “Strong market activity continued to support home prices to trend upward in Q1 2026. According to the Rating and Valuation Department, as at February, the overall residential price index picked up by 2.6% in the first two months of the year. Meanwhile, our Cushman & Wakefield mid-and-small size units price index shows that home prices rose by around 5% in March from the end-2025 level. At the same time, our tracking of popular housing estates demonstrates that prices across different market segments maintained upward momentum throughout the quarter. Prices at City One Shatin, representing the mass market, rose 5.6% q-o-q, while prices at Taikoo Shing, representing the mid-market, strengthened by 8.6% q-o-q. Residence Bel-Air, representing the luxury segment, recorded a notable 7.1% q-o-q rise. At the same time, underpinned by housing needs from incoming talent, the residential rental index continued to trend up to hit a new record high. Coupled with interest rates now remaining at relatively low levels, investors have been encouraged to enter the market, while renters and potential buyers are expediting home ownership decisions.”

Rosanna Tang, Executive Director, Head of Research, Hong Kong, Cushman & Wakefield, added, “The city’s housing market largely sustained the strong momentum carried over from late-2025, with both transaction numbers and prices continuing to climb in Q1. Despite recent Middle East geopolitical tensions, the overall residential market has continued to demonstrate resilience, with the number of residential sale and purchase agreements exceeding 6,000 cases in both February and March. Looking ahead, more capital is expected to flow into Hong Kong as a safe haven, helping to keep local interbank rates at relatively low levels and providing support to the housing market. Moreover, our Verbal Enquiry index has now risen for three consecutive months, reflecting sustained positive sentiment in the Hong Kong residential market. We anticipate full-year transaction numbers in 2026 to reach 65,000 to 70,000 units. As for the home prices forecast, if geopolitical tensions in the Middle East ease in the near term, the impact on the Hong Kong residential market is likely to be limited, and we would expect full-year home prices to rise in a range of 7% to 10%. However, if tensions further escalate, uncertainty may weigh on interest rates and buyer confidence, with annual price growth to moderate to around the 5% mark.”

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Caption: (From left to right) Rosanna Tang, Executive Director, Head of Research, Hong Kong, Cushman & Wakefield; John Siu, Managing Director, Head of Project and Occupier Services, Hong Kong, Cushman & Wakefield and Edgar Lai, Senior Director, Valuation and Advisory Services, Hong Kong, Cushman & Wakefield.

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Cushman & Wakefield (NYSE: CWK) is a leading global commercial real estate services firm for property owners and occupiers with approximately 53,000 employees in nearly 350 offices and 60 countries. In Greater China, a network of 23 offices serves local markets across the region. In 2025, the firm reported revenue of $10.3 billion across its core services of Valuation, Consulting, Project & Development Services, Capital Markets, Project & Occupier Services, Industrial & Logistics, Retail, and others. Built around the belief that Better never settles, the firm receives numerous industry and business accolades for its award-winning culture. For additional information, visit www.cushmanwakefield.com.hk or follow us on LinkedIn (https://www.linkedin.com/company/cushman-&-wakefield-greater-china).