The recovery of Hong Kong’s Grade-A office market is gaining pace, fueled by Central’s robust comeback as rents in the prime business district posted their strongest half-year rally in 15 years.

Real-estate services firms attribute the uphill leasing momentum to the equity market’s thriving new listing activities and the sustained expansion of the cross-boundary wealth management industry, predicting an overall full-year rental surge of four to six percent.

Rents for Hong Kong’s Grade-A offices have picked up 3.2 percent in the first six months of this year, with those in Central having climbed 7.3 percent -- the highest since half-year rental growth peaked in 2011 -- according to real-estate services firm JLL. Benchmark buildings in the district led the surge. One International Finance Centre and Two IFC logged rental hikes of more than 20 percent, with per-square-foot prices exceeding HK$130 ($16.66).

By late June, the vacancy rate for Central’s Grade A office buildings had dropped to 8.8 percent -- the lowest level in 43 months -- while citywide vacancies had also improved, falling to about 13 percent.

JLL said the office-market rebound was primarily driven by the special administrative region’s vibrant initial public offerings in the first half of 2026 as new listing activities generated leasing demand from issuers, sponsors, law firms and compliance teams. In addition, capital inflows from the Chinese mainland drove the expansion of private banks, family offices and asset managers in the SAR, it said.

According to official data, 87 companies went public on the local bourse in the first half of this year -- up 98 percent year-on-year. Total assets under management topped the world last year, hitting a record high of HK$42.2 trillion, with net fund inflow from mainland-related firms jumping by 80 percent, the Securities and Futures Commission said.  

As the cost of renting a workspace in Central continues to rise, some tenants are focusing on more affordable commercial units in other locations, resulting in what real-estate firms call a “spillover effect” that benefits Grade A offices in districts like Wan Chai and Tsim Sha Tsui.

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John Siu Leung-fai, managing director of Cushman & Wakefield Hong Kong, said the trend has also stimulated demand for newly completed commercial properties in the western part of Kowloon, where several large leasing deals have been clinched.

“Tenants involved in the most recent West Kowloon deals were mainly from the financial sector, such as banking and insurance. Leasing activities concerning newly completed projects have clearly picked up, and footfall from prospective tenants has also risen significantly,” he said.

Swiss multinational investment bank UBS said it will relocate its Hong Kong office later this year from Two IFC in Central to International Gateway Centre in West Kowloon -- a project developed by Sun Hung Kai Properties. The bank will occupy an entire 14-storey building -- a quarter of IGC’s two sets of twin-block towers. Global insurer AXA also plans to move into the new landmark, leasing more than 70,000 sq ft.

JP Morgan is set to become the anchor tenant at SHKP’s Artist Square Towers, leasing six floors totaling 250,000 sq ft under a 10-year lease. The project, located in the West Kowloon Cultural District, is still under construction and due to be completed next year.

Ada Fung, chief operating officer of CBRE Hong Kong’s advisory services, said she would not consider the trend a “spillover”, but there has been growing interest in West Kowloon among office tenants.

She pointed to the district’s proximity to West Kowloon Station, saying access to the high-speed railway network has attracted many companies with business strategies focused on the mainland.

“Also, the West Kowloon Cultural District isn’t just a commercial neighborhood. It has a rich mix of cultural amenities … I believe such an environment appeals to many big companies,” Fung said.  

However, industry analysts said a meaningful rental hike in West Kowloon will take time as available office space in the area remains sizeable, and competition from nearby Tsim Sha Tsui is intense.

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“Whether it’s the Greater Tsim Sha Tsui area or West Kowloon, rents are likely to edge up, but the pace may be quite slow,” Fung said.

CBRE and Cushman & Wakefield expect Hong Kong’s overall Grade-A office rents to see a full-year growth of four to six percent, while JLL sees an increase of up to five percent.

Contact the writer at gabylin@chinadailyhk.com