Hong Kong office, retail rents rise in Q1 as prime demand holds: CBRE

Office rents rose 1.6% whilst retail sales posted the strongest growth among selected APAC markets.

Hong Kong’s office and retail property markets showed signs of improvement in the first quarter of 2026, supported by lower market rates, steady leasing demand, and stronger retail sales, according to CBRE.

Hong Kong’s 1M Hong Kong Interbank Offered Rate stood at 2.48% as of May 6, down 210 basis points from end-2024 and 60 basis points from Q42025, suggesting ample liquidity and/or capital inflows.

In the office sector, Grade A net absorption stayed positive for a fourth consecutive quarter, supported by bank relocations in West Kowloon and a further rebound in activity in Central.

Grade A office rents rose 1.6% QoQ, with Central outperforming other districts after posting 5.9% rental growth.

Retail also improved during the quarter. CBRE said Hong Kong retail sales rose to their highest level since 2019, helped by Lunar New Year spending. Based on CBRE’s chart, Hong Kong recorded the strongest Q1 retail sales growth among the selected Asia-Pacific markets, at about 12% YoY.

Prime retail vacancy remained tight as retailer demand continued to focus on core areas. This supported further rental growth, with Hong Kong retail rents rising by around 1% QoQ.

The logistics market remained more pressured. Hong Kong logistics vacancy edged down to 12.8% as landlords adjusted rents to support occupancy, but logistics rents still declined by around 1% QoQ.

Investment activity softened, with Hong Kong commercial real estate investment volume falling 33% QoQ. However, CBRE noted a pickup in hotel transactions as investors looked for student housing or co-living conversion opportunities.

Hong Kong logistics yields also moved outward by 10 basis points QoQ, even as borrowing rates fell sharply, helping move yields to positive carry.

Across Asia Pacific, commercial real estate investment volume fell 9% QoQ to US$46.2b, pulling back from the previous quarter’s record high, but remained 18% higher YoY. CBRE said favourable occupier market fundamentals should help support investor confidence despite geopolitical and inflation risks.