Hongkong Land said office demand is on the rise in Central (Getty Images)
Hongkong Land said its underlying profit rose 5 percent year-on-year in the first quarter, as lower financing charges offset reduced contributions from Singapore following the disposal of Marina Bay Financial Centre Tower 3 ahead of the launch of its maiden private office fund.
The Jardine Matheson-controlled developer also reported improving conditions in Hong Kong’s Central office market, with committed vacancy in the company’s flagship portfolio narrowing to 5.5 percent as of 31 March from 6 percent at the end of 2025, while physical vacancy was steady at 7 percent.
Demand for prime Grade A offices in Central has strengthened in recent months, Hongkong Land said Tuesday in a release, with market rents now growing amid tight supply for top-tier buildings as tenants from the asset management, financial services and tech sectors expand.
“Every single law firm is just running out of space,” Hongkong Land CEO Michael T Smith said at this month’s Mingtiandi Singapore Forum. “Private equity needs more space. Hedge funds need more space.”
City-State Strategy
The update comes after Hongkong Land sold its one-third interest in MBFC Tower 3 to Keppel REIT late last year before teaming with the Qatar Investment Authority and Dutch pension investor APG to establish the Singapore Central Private Real Estate Fund. The S$8.2 billion ($6.4 billion) private vehicle is seeded with stakes in Marina Bay Financial Centre Towers 1 and 2, One Raffles Quay, One Raffles Link and Asia Square Tower 1.
Hongkong Land group CEO Michael T Smith
Hongkong Land said the SCPREF portfolio delivered solid operating performance during the quarter, benefiting from what it described as a sustained flight-to-quality trend in Singapore’s prime Marina Bay office market. The company aims to grow assets under management at SCPREF to S$15 billion within five years as it builds out a third-party capital platform under its Strategic Vision 2035 plan.
The group also completed the acquisition of a 10.8 percent interest in Suntec REIT in March for S$541 million, saying the investment allowed it to redeploy recycled capital into prime assets in Singapore, a market where it retains “strong conviction”.
As part of a broader organisational overhaul, Hongkong Land said it had begun implementing a portfolio-led operating model with four portfolio CEOs overseeing Hong Kong Central, SCPREF, the Westbund Central precinct in Shanghai and the remainder of the mainland China portfolio. The restructuring is expected to continue through the end of 2026.
Hongkong Land said full-year underlying profit is now expected to be “mildly higher” than 2025 levels, supported by improving leasing sentiment in Hong Kong and tighter cost management across the business.
Hong Kong Office Recovery
The company’s improving Central occupancy figures come as Hong Kong’s broader office market begins to stabilise after several years of elevated vacancy and declining rents.
Central Grade A office vacancy fell to 9.2 percent at the end of April from 9.6 percent a month earlier, according to JLL’s latest report. Tenants in the prime district took up 100,000 square feet (9,290 square metres) more space than they gave back per month on average during the first four months of 2026.
JLL said overall Hong Kong office rents rose 1.2 percent from March, led by a 2.1 percent increase in Central, while the citywide vacancy rate was unchanged at 13.5 percent.
The consultancy also highlighted growing demand from insurers, including French giant AXA’s lease of three floors spanning 97,500 square feet at Sun Hung Kai Properties’ International Gateway Centre in West Kowloon.
