Colliers: The forecast increase for office rents in Central/Admiralty was raised to a maximum of 8% this year, but Kowloon East is expected to fall by more than 5%

The Zhitong Finance App learned that Lee Yuen-yan, head of Colliers Hong Kong's research department and retail consulting, said that although the macroeconomic environment is still complex and changeable, the Hong Kong commercial real estate market has shown good resilience. Corporate tenants are increasingly demanding on site selection and asset quality, and are more inclined to choose high-quality properties in core business districts such as Central and Admiralty. At the same time, investors continue to focus on investment opportunities with stable returns and long-term value-added potential, including office assets, and properties related to education and lodging.

Ngan Wai-ping, head of corporate customer service at Colliers Hong Kong, said that demand in core commercial areas will continue to support overall office market performance. Although about 1.2 million square feet of additional supply will be completed in the second half of the year, landlords and tenants have roughly reflected the relevant supply factors in the current rent level. The company has raised the rent increase forecast for Central/Admiralty to 5% to 8% this year; however, rents in non-core commercial areas will remain under pressure, with rents in Kowloon East expected to drop by more than 5%.

In terms of retail stores, Li Yuen-yan said that with the gradual normalization of some of the factors driving consumption growth in the second half of the year, the pace of retail sales growth may slow down. However, the continued increase in visitors to Hong Kong and the limited supply of stores in core locations will continue to support rental demand and rent performance. The company expects first-tier street store rents to record an increase of about 3% for the full year of 2026. In terms of industrial properties, Ngan Wai-ping expects a year-round decline of about 5%, but the long-term fundamentals of the market remain steady. Among them, the continued growth in artificial intelligence-related trade activities and Hong Kong's active expansion of gold storage capacity will bring new demand opportunities for professional logistics facilities, high-security storage space and related supporting services.

In the second quarter, total investment turnover was around HK$14 billion, down only 5.5% from the previous quarter. Among them, overseas capital continued to be active. Overseas capital inflows into Hong Kong in the second quarter reached a three-year high, with more than 60% coming from Singaporean investors. Zhai Cong, head of capital markets and investment services at Colliers Hong Kong, pointed out that as more bank shares and price adjustment assets are launched on the market, investors will usher in more attractive market entry opportunities, and it is expected that education and accommodation assets will become the main driving force for the investment market in the second half of 2026, and maintain a total investment turnover forecast of about HK$42 billion for the whole year.