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Chris Tsang

Commercial property prices in Hong Kong are likely to continue their downward spiral, as the market risks getting trapped in a “vicious cycle” of tighter bank lending and weakening demand, a property agency has warned.
Banks in the city had adopted a more conservative approach towards approving mortgages for commercial properties over the past three years, introducing stricter approval standards and terms, said Eric Tso Tak-ming, chief vice-president at mReferral Mortgage Brokerage Services, at a press conference on Tuesday.
Only about 20 per cent of commercial property transactions in Hong Kong this year have involved mortgage loans – a sharp decline compared with levels seen during the market’s peak in the early 2010s, according to Tso.
“In reality, only very powerful end users and investors are buying commercial properties these days,” Tso said. “Currently, only medium and small banks are more proactive in offering these mortgages in Hong Kong, while large banks tend to avoid the risks.”
By contrast, when Hong Kong’s commercial property market was at its height in 2012 and 2013, about 30 to 40 per cent of transactions involved mortgages, Tso recalled.
“Nowadays, banks – especially large banks – are reassessing loan customers,” Tso said. “These assessments include the mortgage applicant’s background and repayment ability, as well as their asset liquidity.”
Banks will still lend money to those with strong financial backing, but it depends on the industry, according to Tso. They were also approving loans based on a property’s valuation, he added.
“Banks tend to be more lenient when approving mortgages for commercial properties with larger scale, concentrated in grade A office buildings, and with more active trading,” Tso said.
Some commercial property prices in Hong Kong have fallen by more than 40 per cent from their historical highs, according to Dave Ma Tai-yeung, CEO of Midland IC&I.


Prices were still “in the process of bottoming out”, Ma said, with the average price per square foot for grade A and grade B commercial space hitting record lows.
In August, grade A office prices were down 48.5 per cent from historical highs on average, while grade B office prices were down 49.2 per cent, according to Midland IC&I. Prices for industrial buildings were 37.2 per cent below their peak, while retail shop prices were down 47.1 per cent.
Though the volume of commercial property transactions in the first eight months of 2026 rose 14.5 per cent year on year to 3,494, the combined value of those transactions was down 3.5 per cent year on year at HK$36.2 billion (US$4.6 billion), Midland IC&I data showed.
The price downturn threatens to become self-reinforcing, given the importance of commercial real estate (CRE) as a form of collateral for corporate loan financing, according to Ma.
“If CRE prices and rental values continue to decline, the borrowing capacity of owners and businesses may decrease, and some borrowers may face difficulties in supplementing collateral, accelerating repayments or refinancing,” he said.
“If the market adjustment is too rapid, it could create a vicious cycle of valuation downgrades, credit tightening, forced sales and further price declines.”
Rising caution from lenders risked harming swathes of the CRE market, Ma warned.
“If banks generally become more cautious due to risk management considerations, not only will highly leveraged landlords or those with weak rental cash flow be affected, but the working capital turnover of retail, catering, logistics, trade, professional services and other SMEs (small and medium-sized enterprises) may also be put under pressure,” he said.
Ma believes that banks should focus on borrowers’ repayment ability, rental cash flow and business prospects, and provide appropriate refinancing or restructuring arrangements for CRE owners and SMEs with actual operating incomes, good repayment records and feasible restructuring options.


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Tighter bank lending is further weakening demand for commercial property in Hong Kong, and could tip the market into a ‘vicious cycle’, agency warns


Tighter bank lending is further weakening demand for commercial property in Hong Kong, and could tip the market into a ‘vicious cycle’, agency warns.


Hong Kong commercial property downturn to worsen amid tightening credit: agents

.css-1c6uqr6{color:inherit;font-weight:inherit;font-size:inherit;font-family:inherit;line-height:inherit;overflow-wrap:break-word;}Tighter bank lending is further weakening demand for commercial property in Hong Kong, and could tip the market into a ‘vicious cycle’, agency warns

Tighter bank lending is further weakening demand for commercial property in Hong Kong, and could tip the market into a ‘vicious cycle’, agency warns