JLL warns of extended slump property market into next year

JLL expects overall office rents to decline around 5% in 2025.

Hong Kong’s property market is expected to face further correction across most sectors in the second half of 2025, with no full recovery likely before 2026, according to JLL’s mid-year market forecast.

Whilst Grade A office leasing activity improved in the first half, with net absorption of 130,700 sq ft, JLL expects overall office rents to decline around 5% in 2025.

Rents in Central are projected to stabilise by year-end, helped by demand for high-quality space and an uptick in IPO activity. Submarkets like Hong Kong East could see rents fall as much as 10% due to higher vacancy and new supply.

JLL forecasts retail rents to fall by 5–10% this year for both High Street Shops and Prime Shopping Centres, with vacancy rates likely to rise further as 600,000 sq. ft. of new retail space enters the market in the second half.

Commercial property investment volume for transactions above $50m fell 25.7% YoY to $14.6b in H1. JLL expects capital values for Grade A offices, High Street shops, and warehouses to decline 5–10% over the rest of the year.

The residential market is facing continued pressure from oversupply. With 93,000 private units in the pipeline and an estimated 56.7 months to clear inventory, JLL forecasts mass home prices to decline by 5%, while luxury home prices may fall 5–10%.

However, luxury rents are expected to rise up to 5%, supported by inbound professionals and student tenants. Joseph Tsang, Chairman of JLL Hong Kong, believes low interest rates and developer discounts may stabilise sentiment, but meaningful recovery is unlikely before next year.

Looking ahead, JLL said the government’s planned land disposals in the Northern Metropolis could face limited interest due to high upfront costs and infrastructure risk.