Hong Kong Major Report - Hong Kong Market Outlook 2025

CBRE expects geopolitical tensions to increase in 2025, presenting challenges for corporations and investors. The likelihood of fewer rate cuts in the U.S. will keep Hong Kong’s commercial properties in negative cash flow positions and deter tourist spending in the city. However, favourable policy initiatives aimed at attracting talent and tourists to Hong Kong are expected to mitigate these impacts and stimulate demand for commercial properties.

1. Economy
   Sustained geopolitical tension and the potential for fewer interest rate cuts point to slower economic growth in 2025. However, government stimulus measures could generate new business activity.
   
2. Investment
   Negative carry will continue to limit the chances of a strong uptick in investment activity. However, the rising availability of discounted assets and financially stressed sales suggest a modest increase in full-year investment volume.
   
   
3. Office
   Leasing momentum is expected to improve slightly thanks to mainland China's widely anticipated stimulus policies targeted at steering consumption and investment demand. High supply will drive up the vacancy rate to another record high in 2025.
   
   
4. Retail
   Leasing demand is expected to remain healthy on the back of attractive rents resulting in higher profit margins for retailers. However, the slow recovery of retail sales will provide limited room for rental growth.
   
   
5. Industrial & Logistics
   While geopolitical tension will ensure leasing momentum remains slow, forced relocations from brownfield land resumptions could generate new demand. E-commerce is expected to dominate leasing activity.