Commercial market shows uneven gains as broader rents continue slide

Financial and luxury demand lifted the region's prime assets, whilst the wider market lags.

Hong Kong commercial property shows a segmented recovery, with Grade A offices and selected retail assets stabilising, whilst broader market rents continue to decline, according to a report by S&P Global Ratings.

The report says the recovery is concentrated in specific segments rather than spread across the sector.

Premium office space in prime locations is seeing stabilisation, supported by a resurgent financial industry, whilst retail assets linked to luxury spending are also improving, driven by an influx of shoppers from mainland China.

Wilson Ling, Credit Analyst at S&P Global Ratings, said the region’s commercial property sector is starting to stabilise in select segments, with benefits concentrated amongst landlords with Grade A office space in prime locations and those exposed to luxury retail demand.

The report also notes that overall office and retail markets continue to face pressure from structural oversupply and weaker demand outside prime segments.

Net take-up in Grade A offices and retail sales has improved in key areas, but this has not extended across the wider market.

Credit support is expected for rated landlords exposed to the improving segments. However, the report states that office and retail rents across Hong Kong are likely to continue falling in 2026, though at a slower pace than in previous years.

Edward Chan, Credit Analyst at S&P Global Ratings, said investors and stakeholders will note the nuances of a highly varied market, with signals mixed between areas of improvement and structural challenges.

The report says recovery remains uneven, with performance diverging between prime assets and the broader commercial property market.