As the government advances its plans to strengthen Hong Kong's position as an international education hub, the city's education sector is becoming an increasingly active player in the office leasing market. This trend is providing much-needed support for demand, particularly in non-core business districts.
Expansion in Non-Core Districts
Recent leasing activity highlights this growing trend. The Hong Kong University of Science and Technology (HKUST) expanded its back-office footprint by taking up an additional 24,000 square feet at Manulife Financial Centre Tower B in Kwun Tong. Similarly, the Chinese University of Hong Kong (CUHK) leased six floors at Grand Central Plaza in Shatin, totaling 113,000 square feet, for teaching and administrative purposes.
As greater clarity emerges following the Hong Kong Policy Address regarding land allocation and the positioning of university towns in the Northern Metropolis, universities and student accommodation investors are likely to become increasingly active in both leasing and investment markets.
Modest Improvements in Vacancy Rates
The overall vacancy rate improved modestly in August 2026, declining by 0.3 percentage points month-on-month to 12.5%. While most districts saw improvements, Hong Kong East was an exception, with vacancy rates rising by 1.1 percentage points. Conversely, Tsimshatsui and Kowloon East saw modest improvements, with vacancy rates falling by 0.3 percentage points.
Uneven Rental Recovery
Overall Grade A office rents rose by 0.9% month-on-month in August 2026, driven primarily by stronger rental growth in Central, where rents increased by 1.5%. However, the recovery remains uneven across the city.
This divergence highlights the varying dynamics at play within Hong Kong's office market, as different sectors and districts respond uniquely to current economic conditions.
