CBRE: Hong Kong’s 2025 Property Rates Rise as Office Market Struggles

Hong Kong Property Rates Rise While Office Market Faces Pressure

Hong Kong’s property sector is seeing diverging trends in 2025, with rising domestic and industrial rental rates contrasting with continued declines in the office market, according to CBRE’s analysis of the latest government rateable values.

CBRE Hong Kong has responded to the Rating and Valuation Department’s (RVD) latest valuation list and government rent roll, highlighting key trends in property rates and rental changes for 2025. While domestic and industrial rental rates saw an increase, office rents continued to decline, signaling an uneven recovery across the real estate sector.

According to Shana Lam, Executive Director of Valuation & Advisory Services at CBRE Hong Kong, the rates concession per tenement was reduced to HK$500, the lowest in five years, reflecting RVD’s optimistic economic outlook. She emphasized that in previous downturns, larger concessions were granted to reduce tax burdens on small tenements.

Key Findings from CBRE’s Market Analysis

1. Timely rates concession

• A total of $500 per tenement was granted for rates concession this year, being the lowest amount in the past 5 years.
• RVD’s reduced rates concession amount reflects the Department’s optimistic outlook on the local economy, concessions were more generous during economic downturn as a relief on the tax burden of small tenements, upholding the “affordable users pay” principle.

2. Considerable increase in domestic rates payment

• Small and Medium Premises: Ratespayment before concession increased 6.5% and 5.9% respectively year-on-year from RY 2024/25 due to rental increment brought by the influx of talents from the Top Talents Pass Scheme and students from the doubled enrolment quota for non-local students in Government-funded post-secondary institutions.
• Large Premises: While RVD’s rental index increased slightly by 1.2% for the same period, the rates payment before concessionincreased by 21.8%, as brought by the effect of the Progressive Rate System where monthly rental above HK$70,000 would be subject to a doubled tax rate at 12%. We strongly suggest developers/owners holding large premises to keep their rates bill of the coming RY 2025/26 under review.

• Year-on-year change in rates payment before concession changes from reduction to a mild increment of 0.8%, representing signs of recovery in the retail sector.

• Office rates payment recorded a 1.5% reduction in light of the oversupply of office space.   

• Industrial rentals carry on with the strong headwinds, reaching a 3.9% year-on-year growth fostered by the booming e-commerce.