LCQ17: The supply and demand situations of private offices
Question:
It has been reported that according to the estimation of a surveyor firm, the vacancy rate of Grade A private offices in Central has exceeded 13 per cent as at the end of December 2024, and the rents in the district are projected to further drop by 5 per cent in 2025. In this connection, will the Government inform this Council:
(1) of the average per-square-foot selling prices and monthly rents, as well as the vacancy rates, for various grades of private offices in Hong Kong in the past three years, together with a quarterly breakdown of such figures;
(2) whether it has projected the supply and demand situations of various grades of private offices in various districts in the next five years; and
(3) of the specific strategies to achieve a balance between the supply and demand of private offices in various districts so as to mitigate the problem of worsening vacancy rates; whether it will introduce a flexible mechanism for zoning sites in new development areas (e.g. the Northern Metropolis) for commercial uses; if so, of the details; if not, the reasons for that?
Reply:
President,
In consultation with the Financial Services and the Treasury Bureau, the reply to various parts of the question is as follows:
(1) The Rating and Valuation Department (RVD) obtains property transaction and rental information from a variety of sources for compiling and periodically publishing the average prices and average rents of private premises. For private offices, it has been the RVD's established practice to conduct detailed analysis of the seven main private office districts. According to the Hong Kong Property Review 2024 published by the RVD last April, the total stock of private offices in Hong Kong at the end of 2023 amounted to around 13 100 000 square metres (sq m), comprising 66 per cent Grade A, 23 per cent Grade B and 11 per cent Grade C offices. Their quarterly average prices and average rents by grade in main sub-districts in the past three years (i.e. from 2022 to 2024) as published by the RVD are set out at Appendix 1 and Appendix 2 respectively.
In addition, the RVD also conducts year-end vacancy surveys on private premises every year to provide relevant data of their vacancy position in the Hong Kong Property Review. The year-end vacancy rates for private offices in Hong Kong by grade from 2021 to 2023 are tabulated below:
| Year | Grade A | Grade B | Grade C | Overall |
| 2021 | 12.5% | 13.1% | 9.3% | 12.3% |
| 2022 | 15.1% | 15.1% | 8.8% | 14.4% |
| 2023 | 16.0% | 14.9% | 9.0% | 14.9% |
(2) The Government does not estimate the demand for private offices in the short to medium term. As for supply of private offices, the RVD publishes in the Hong Kong Property Review each year the estimated completions of all grades of private offices in the coming two years. According to the Hong Kong Property Review 2024 published by the RVD last April, the estimated total completion of private offices in 2025 is around 136 000 sq m, constituting a slight fall as compared to 156 000 sq m in 2024. The estimated completions of private offices by grade in 2024 and 2025 are tabulated below:
| Year | Grade A (sq m) |
Grade B (sq m) |
Grade C (sq m) |
| 2024 | 146 000 | 9 300 | 1 000 |
| 2025 | 126 400 | 9 400 | 300 |
(3) The Government has been proactively taking various measures to promote the healthy development of the commercial property market, including:
(i) The Government will assess the situation pragmatically and roll out land in a prudent and paced manner. Taking into account the current economic environment, the office vacancy rates and the upcoming supply expected, the Government has not put up any commercial site for sale since the financial year 2023-24, the last piece of commercial site sold in recent years being the site at Sai Yee Street in Mong Kok in March 2023.
(ii) The Government is proactively implementing industrial policies and competing for talents and enterprises, with a view to raising both the capacity and quality of the economy. By stepping up efforts in attracting enterprises and investment and promoting Hong Kong's unique advantages, Hong Kong will continue to draw more Mainland and overseas enterprises and investment to set up or expand their operations here, including establishing new companies or upgrading existing business in Hong Kong to regional headquarters, thereby boosting demand for shops and office space. According to the results of the latest annual survey by Invest Hong Kong and the Census and Statistics Department, the number of companies in Hong Kong with overseas or Mainland parent companies rose to 9 960 in 2024, representing an annual growth of 10per cent and reaching a record high. The number of regional headquarters, regional offices and local offices of these companies also increased by more than 5 per cent, 4 per cent and 13 per cent respectively. In addition, by end 2024, the Office for Attracting Strategic Enterprises has successfully attracted nearly 70 strategic enterprises. The majority of these enterprises plan to establish their global or regional headquarters in Hong Kong, which will drive the demand for office space.
(iii) In terms of land use planning, traditional office premises are mainly zoned "Commercial" (the "C" zone) on the statutory plans. Apart from office, the "C" zone generally accommodates various other always-permitted uses including hotel, eating place, shop and services, educational institution, exhibition or conference hall, place of recreation, sports or culture, place of entertainment, and information technology and telecommunications industries (such as data centres, data processing/computer centres). In other words, the current planning regime provides flexibility for developers to pursue other non-office commercial uses within the "C" zone, taking into account market conditions and business considerations. In addition, the recently amended planning guidelines for the Hung Shui Kiu / Ha Tsuen New Development Area in the Northern Metropolis no longer specify the allocation of floor space of commercial sites to office and retail uses. This is to reserve sufficient flexibility in planning to enable timely response to market changes.
(iv) When planning the new development areas in the Northern Metropolis, we will suitably propose individual sites for a wider range of uses to cater for the changing market needs. For example, sites near the proposed Northern Link Railway Station are zoned "Other Specified Uses" annotated "Mixed Use" on the San Tin Technopole Outline Zoning Plan. This is to endow the area with flexibility in development, allowing various uses including commercial, residential, educational, cultural, recreational and entertainment uses, either vertically within a building or horizontally over a spatial area.
(v) For certain sizable development projects that involve larger investment, the Development Bureau (DEVB) will maintain close communication with the market and relevant industries, gauging the views of the stakeholders on the development direction of the project and the tender conditions. For example, the DEVB invited the market last December to submit expression of interest for the three pilot areas of large-scale land disposal in the Northern Metropolis, hoping to collect market views and suggestions in order to finalise the open tender details and conditions later.
(vi) The Northern Metropolis is a development project spanning across a number of years. We are mindful of the need for flexibility in planning to timely meet the needs of the society and industry development. Even if the relevant statutory plans have designated the permitted land uses for sites within the Northern Metropolis, the current planning regime caters for adjustment by allowing applications for planning permission and amendment of plans. The Town Planning Board will holistically consider these applications in light of prevailing circumstances.
Ends/Wednesday, February 12, 2025
Issued at HKT 17:45
Issued at HKT 17:45
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