Grade A office sees YTD rental growth of 6.1 percent as total leased area reaches 1.4 mn sq ft in Q3

The total new leased area for the third quarter in the Grade A office market reached 1.4 million sq ft, the highest quarterly level since 2019, supported by expansion activities from the banking, financial services and insurance sector, according to global real estate services firm Cushman & Wakefield.

Overall citywide rental level rose by 1.7 percent from the previous quarter. Citywide net absorption reached 412,400 sq ft for the quarter, bringing the overall availability rate to trend further downward, whereas year-to-date rental growth recorded 6.1 percent. Greater Central rents continued to climb by a further 3  percent from the previous quarter, while non-core area rental level declines further narrowed. Rents in Hong Kong East and Hong Kong South edged up slightly in Q3. 

"Rents in Greater Central grew by 13 percent year-to-date, reflecting strong demand for prime offices. However, mid-priced Grade A offices, particularly
those with net effective rents of around HK$45-60 psf, are expected to continue facing headwinds, as abundant existing space and forthcoming supply across multiple submarkets within this price range is likely to sustain intense competition, " said John Siu Leung-fai, managing director of Cushman & Wakefield Hong Kong.

Full-year rental growth in Greater Central is now projected to grow by 12 percent to 14 percent, supporting the citywide Grade A office rental level to rise by 5 percent to 7 percent in 2026, Siu added. 

Meanwhile, residential market sentiment has turned more cautious in the third quarter, with total residential transaction numbers slipping by 21 percent year-on-year to around 13,240 cases, while home prices declined by 0.8 percent during July and August. Some prospective buyers reverted to a wait-and-see stance after the sustained release of purchasing power over the past year coupled with the shift of the US Federal Reserve rate direction, increased stock market volatility and heightened uncertainties, causing a slowdown in transaction activity from July onwards. 

A total of 13,242 residential transactions were recorded in Q3, down 40 percent from the last quarter, bringing cumulative transactions to reach 54,052 cases for the first nine months of the year.

The frequency and pace of rate hikes, together with whether local banks will follow suit, will be the key factors affecting homebuyers’ purchasing decisions and affordability, the real estate services firm added. 

In addition, Hong Kong retail sales growth remained resilient in Q3, driven by growing tourist arrivals and stronger economic fundamentals supporting local consumption sentiment. The city’s overall retail sales for the January to August 2026 period reached HK$266 billion, up 8.5 percent. Among key retail categories, the Jewellery & Watches sector recorded the strongest performance, recording sales growth of 22.6 percent. Other sectors recorded more modest low single-digit growth. 

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