Hong Kong's office market has finally come out of the woods.

In Central, Hong Kong, a commercial building has been stuck in an awkward situation for two full years. It is one of the rare brand-new super Grade A office buildings in Central, with neighbours being the Bank of China Tower and the HSBC Main Building. It has dual lobbies, a sky garden, unobstructed views of Victoria Harbour from every floor, and is equipped with 185 parking spaces.

When it was completed in 2024, its occupancy rate was only 10%. That year, Hong Kong's office vacancy rate hit a record high. The news that the property belonging to the Li family could not be leased out became the biggest headline in Hong Kong that year. This building is called Cheung Kong Center Phase 2. This year, it has suddenly become highly sought-after. In half a year, its occupancy rate has more than doubled.

This is not the only such case.

Data from CBRE shows that the net absorption of office space in Central has exceeded 200,000 square feet this year. In the past 20 years, this figure has only appeared four times.

According to data from JLL, the rent of Grade A offices in Central rose by 7.3% in the first half of the year, marking the largest half-year increase in 15 years. The nearby International Finance Centre has almost no vacant units, and real estate agencies are holding a waiting list of prospective tenants.

Nearly all the parties scrambling for these office spaces are financial institutions.

The day before yesterday, Henderson Land held a launch event for Central Yards. This new Central harbourfront project will not be completed until next year, yet its occupancy rate has already exceeded 70%, with all tenants being financial institutions. Its largest tenant is Jane Street, the world's top quantitative trading firm that recorded a net trading revenue of 39.6 billion U.S. dollars in 2025. When it entered Hong Kong in 2010, it only leased two floors. This time, it leased six floors in one go, setting a new record for a single tenant in Central in decades.

Another leading U.S. quantitative firm SIG, in order to further tap into China's ETF market, expanded its Hong Kong office from less than 20,000 square feet to 52,000 square feet. Its new location is exactly Cheung Kong Center Phase 2.

The buildings have not changed, but Hong Kong has changed. In the first half of this year, 87 new companies were listed in Hong Kong, raising 210.1 billion Hong Kong dollars, hitting a new high for the same period in nearly five years, with more than 500 other companies still in the listing queue.

In the competition for the status of Asian financial centre, Hong Kong has rolled out two major measures: tax system reform and preferential policies for fund management. Last year, funds voted with their feet, with 70% of new funds choosing Singapore. This year, over 70% of newly established funds have chosen Hong Kong.

Capital has returned, and people are following the trend. Three months ago, the family of Tang Shing-bor, known as the "shop king" who built his fortune from retail property investment, was formally petitioned for bankruptcy by creditors. This is the third such case within half a year. Hong Kong residents spent decades proving that property prices could only rise, only to spend a few years proving that this statement is wrong.

The "shop king" has fallen, but the properties he left behind are being snapped up by buyers. In 2012, Tang Shing-bor spent 528 million Hong Kong dollars to acquire an industrial building in Tsuen Wan and converted it into a hotel. In March this year, China Resources Land took over the property at a price of 953 million Hong Kong dollars. It will not operate it as a hotel, but convert it into student dormitories. A senior investment banking executive revealed that the rental yield of the project is around 5.5%.

Why convert it into student dormitories? Because Hong Kong is facing a severe shortage of student beds. In the 2024/25 academic year, the number of non-local students in Hong Kong has reached nearly 80,000. By the 2029/30 academic year, this figure will further rise to 100,000, while the supply of student beds cannot keep up. Among the eight public universities in Hong Kong, an average of 3.4 students compete for one bed. For students studying in Hong Kong, getting admitted to a university is the first hurdle, and securing a dormitory bed is the second.

CBRE estimates that the shortage of student beds in Hong Kong has exceeded 50,000, and the gap will expand to 75,000 by 2030. As a result, capital has started snapping up properties. Centaline Property, JD.com, and Singapore's CapitaLand have all purchased hotels in Hong Kong this year, planning to convert them into student apartments.

The most active property buyers in Hong Kong right now are universities. City University of Hong Kong has purchased four floors of office space in Festival Walk, the Hong Kong University of Science and Technology has acquired an entire industrial building in Sai Kung, and the seller is none other than the Tang Shing-bor family. The Chinese University of Hong Kong has taken over the former headquarters that AECOM vacated.

The government is also giving the green light to such projects. An application to convert a commercial building in Tai Kok Tsui into student dormitories was approved in just two months.

For decades, Hong Kong people believed that properties could generate profits for them. But Hong Kong this year is telling a different truth: properties do not make money, people do.

Traders bring in capital, and students bring in future growth. Buildings are just containers, and their value is determined by the people that fill them, which explains the recovery of the Central office market in Hong Kong.

Many people attribute the predicament of the Chinese mainland's office market to oversupply. But what is truly scarce is probably never the buildings themselves, but a compelling reason for people to step through their doors. And Hong Kong has found that reason.

This article is from the WeChat Official Account "One Property", written by Zhang Ziyi, and published with authorization from 36Kr.