Hong Kong halts sales of commercial sites

But this move “will be effective for the next five years only," a property analyst said.

Hong Kong has put the sale of commercial sites on hold for this year, Financial Secretary Paul Chan said in his Budget 2025-26 speech on 26 February.

Chan cited the slow sales of offices and high vacancy rates.

“In view of the high vacancy rates of offices in recent years and the relatively ample supply in the next few years, the government will not roll out any commercial site for sale in the coming year to allow the market to absorb the existing supply,” Chan was quoted saying during the speech.

"We will also consider rezoning some of the commercial sites into residential use and allowing greater flexibility of land use," Chan said.

JLL Hong Kong’s managing director Alex Barnes said that the decision will allow more time for the market to absorb new supply and for economic conditions to improve.

There are currently 14 million sqft of Grade A office space vacant, according to Barnes.

An additional 7.3 million sqft of new commercial buildings are scheduled for completion between 2025 to 2029, JLL Hong Kong estimates.

Effective for the next 5 years only
But the government’s decision not to roll out any commercial site for sale in the coming year will be effective for the next 5 years only, according to Hannah Jeong, Head of Valuation & Advisory Services, CBRE Hong Kong.

Jeong said that it will take between 7 to 10 years for the current supply to be absorbed.

CBRE Hong Kong’s Head of Research Marcos Chan said that the government should also look into revitalising the planning framework to encourage more flexible use of commercial spaces.

“The decision to stop putting commercial development sites up for tender and to convert some of these sites for residential use will help reduce the vacancy issues experienced by various commercial property sectors, [whilst] also addressing long-term housing demand,” CBRE’s Chan said.

However, CBRE Hong Kong’s overall verdict for the real estate sector is “neutral” after the Budget Speech.

“There are fewer policy measures aimed at directly boosting property demand. The complete removal of austerity measures in last year’s Budget Speech has had limited positive effects on transaction volumes and property prices,” CBRE’s Chan said.

High financing costs and an oversupply of properties continue to be significant obstacles to a meaningful increase in investment demand, he added.