The office market in Kowloon is currently undergoing a significant upheaval, facing a substantial oversupply of office spaces that has created a cautious and uncertain environment for tenants. Steve Ng, who is the Executive Director and Head of Kowloon Office Strategy & Solutions at Knight Frank, emphasized that the first half of this year has been particularly challenging for the market. With more than 6.7 million square feet of both new and existing inventory inundating the market, the conditions have led to a palpable sense of trepidation among businesses seeking office spaces.

Stagnation Reigns in Kowloon

As Steve Ng further elaborated, “Demand remains scattered, with only a handful of significant transactions occurring.” This statement encapsulates a broader feeling of hesitation among potential tenants, many of whom are adopting a “wait-and-see” stance toward their leasing decisions. This caution is contributing to a stagnation in the marketplace, making it difficult for landlords and property owners to find new tenants or make effective use of their existing spaces. The lack of new deals suggests that confidence among stakeholders is at a historic low, with no immediate signs of an impending turnaround on the horizon.

Declining Rents and Rising Vacancies

The financial outlook for Kowloon’s office spaces appears bleak, as indicated by the figures from June 2025, which revealed a year-on-year decline in office rents by 3.6%, bringing them down to less than HK$1 per square foot. This statistic is a clear indication of a deepening weakness within the office market. Additionally, the office vacancy rate has experienced a slight uptick of 1.2%, further confirming a prevailing lack of confidence in any forthcoming recovery. Tenant sentiments reflect a pervasive anxiety, with many anticipating that rents could continue to spiral downward, underscoring the belief that signs of recovery may still be far off in the future.

Trade Pressures Loom Large

A considerable number of tenants in Kowloon operate within supply chain industries such as manufacturing, trading, and logistics, which have been under strain for some time. Although there has been a temporary lull in the ongoing US tariff conflicts, these industries remain impacted by persistent trade pressures, which compound the weak demand for office spaces. Given the current oversupply situation, landlords and tenants alike might expect further declines in office rents in Kowloon, with projections estimating a drop of between 9% to 11% by 2025. However, amidst this challenging scenario, there is potential for innovative thinking; it may be time to consider repurposing empty office spaces into trendy pop-up shops or vibrant art galleries, which could provide a fresh avenue for revenue and community engagement—there’s always a silver lining!