Hong Kong Commercial Property Hits Historic Low in 2024, Ricacorp Predicts 8% Rebound
Hong Kong’s commercial property market faced a challenging year in 2024, as reported by Ricacorp Properties’ Commercial Sector on January 13. The total number of transactions recorded for the year was 3,414, marking a historic low since records began in 1996. This represented an 11% drop from the 3,838 transactions in 2023, continuing a three-year decline. The total transaction value also fell by 26% year-on-year to HK$54.485 billion, the lowest in 21 years. The lack of high-value deals in 2024 further contributed to the slump.
Looking ahead to 2025, Ricacorp predicts an 8% rebound in transaction volume, supported by favourable developments such as falling interest rates, the reintroduction of the "multiple-entry" scheme, and the New Capital Investment Entrant Scheme, which is expected to attract new investors. The recovery is expected to be most notable in industrial buildings, with transactions projected to rise by 10% to over 2,000 deals. Office transactions are anticipated to grow by 7%, potentially reaching 700 deals, while shop transactions are forecasted to increase by 6%, reaching approximately 1,000 deals.
The year 2024 was particularly tough across all categories of commercial properties. Industrial building transactions dropped by 13% to 1,814, falling below 2,000 for the first time in history and accounting for 53% of total transactions. Office transactions recorded only 657 deals, a 12% decline, marking the lowest level in four years and the second-lowest in history. The total transaction value for offices dropped by over 50%, amounting to just HK$15.327 billion. Shop transactions also struggled, falling by 6% year-on-year to 943, remaining under 1,000 for the second consecutive year.
High-value transactions also saw a sharp decline. The number of deals valued at HK$100 million or more fell by 22% year-on-year, with only 18 cases recorded. In contrast, lower-value deals dominated the market, with properties priced between HK$2 million and HK$5 million accounting for 33% of office transactions.
Geographically, the decline in transactions was widespread, with seven out of eleven districts experiencing drops. Sha Tin recorded the largest decline, with transactions falling by 35% to just 13 deals. Mong Kok and Yau Ma Tei saw a 31% drop, with only 82 deals, while Tsim Sha Tsui and Jordan also recorded a 31% decline, with 93 deals. Central, Admiralty, and Sheung Wan saw a 20% drop, recording 101 transactions. However, there were areas of growth. Kwun Tong saw a significant surge, with transactions increasing by 270% to 56 deals, while Cheung Sha Wan recorded a 31% increase, with 47 deals.
Looking forward, Ricacorp remains cautiously optimistic about the commercial property market in 2025. They forecast a total of 3,700 transactions, an 8% increase compared to 2024. Total transaction value is expected to rise by 25% to HK$68 billion, driven by institutional investors and high-value deals. Office transaction values are projected to grow by over 60%, potentially exceeding HK$25 billion, with the expectation that the market will gradually stabilise and recover.