Hong Kong Commercial Property: JLL 3Q26 data: Central office on fire; retail decline narrows

According to JLL's 3Q26 data for HK commercial properties, office spot rent Q/Q growth further accelerated from +1.7% in 2Q26 to +2.4% in 3Q26, mostly driven by Central (+4.8% Q/Q, the strongest growth since 2Q15). Overall vacancy rate also improved to 12.4% (the lowest since 1Q23). Notably, Central's vacancy improved to 7.2% (the lowest level since 4Q20). We believe the low vacancy rate in Central, together with the proposed tax breaks for asset managers, would continue to support the recovery in Central office (rents have already rebounded 14% since the trough in 3Q25). We reiterate our view that Central office is our most preferred sub-sector, and Hongkong Land is the best proxy to this (we expect rental reversion to turn neutral in FY27), and Swire Properties (Pacific Place), to a lesser extent, is another beneficiary. Both are our top picks. For retail, rent Q/Q decline narrowed mildly from -1.4% in 2Q26 to -0.9% in 3Q26, although vacancy rates hit a new high at 14.8% (dragged by