Budget 2025: Hong Kong’s land sale halt is ‘too little too late’ to ease office oversupply

The current oversupply – expected to reach 3 million square feet (278,710 square metres) in the coming months – would take between seven and 10 years to digest

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Hong Kong’s skyline with business area taken at The Peak on 4 February 2025. Photo: Sam Tsang

Published: 2:50pm, 26 Feb 2025Updated: 5:10pm, 26 Feb 2025

The Hong Kong government’s 12-month halt on the sale of commercial land will have limited effect in easing the supply glut in the city’s offices, as the moratorium does too little too late to slow the biggest onslaught of newly completed space in 17 years, according to several consultants.

“Taking into account the high vacancy rate of office buildings in recent years and the sufficient supply in the next few years, the budget proposes not to put commercial land for sale next year to allow the market room to absorb the existing supply,” Financial Secretary Paul Chan Mo-po said today. He added that the government may designate some commercial sites for other uses, and provide more flexibility in how the land will be used.

That would not do much, because the current oversupply – expected to reach 3 million square feet (278,710 square metres) in the coming months – would take between seven and 10 years to fully digest, said Hannah Jeong, head of valuation and advisory services at CBRE Hong Kong.

“Boosting the demand [for commercial space] is also important, including government support to attract more enterprises” to invest and open offices in Hong Kong, she said.

Financial Secretary Paul Chan Mo-po delivered his budget in the Hong Kong’s Legislative Council Chamber on February 26, 2025. Photo: Sam Tsang

Hong Kong’s commercial occupancy data paints a grim picture: the vacancy rate in grade A offices crept up to 13.3 per cent in January, from 13.2 per cent in December, according to JLL. Correspondingly, the rental charges have fallen by 0.2 per cent in January, with the full-year decline expected at between 5 per cent and 10 per cent, the consultant said,