Core Insights - The report indicates a slight recovery in Beijing's Grade A office market, with a net absorption of 12,960 square meters in Q2 2025, reversing the negative absorption trend from the previous quarter [1][2] - The average vacancy rate decreased by 0.2 percentage points to 18.4%, stabilizing at levels seen in Q4 2024 [2][3] - Average rental prices fell by 1.6% to 233.1 yuan per square meter per month, with a year-over-year decline of 7.4% compared to Q4 2024 [1][2] Market Supply and Demand - Only one new project, the China Overseas Financial Center Tower 1, was completed in H1 2025, with no new projects expected to be delivered in the second half of the year [2] - The high-tech sector led leasing transactions, accounting for 34% of total leased area, followed by finance and professional services at 22% and 16%, respectively [2] Rental Trends - Financial Street's average rent fell below 400 yuan, decreasing by 6.1% to 389.2 yuan per square meter, reflecting pressure from state-owned enterprises relocating to self-owned offices [3] - The Central Business District (CBD) saw a 2.8% decline in average rent to 255.4 yuan per square meter, with a vacancy rate of 15.1% [3] - The Zhongguancun area experienced a significant drop in vacancy rate by 3.2 percentage points to 12.8%, driven by demand from high-tech companies [3] Future Outlook - A supply peak is anticipated in 2026, with 757,000 square meters of office space expected to be delivered [4] - Companies are expected to prioritize flexible lease terms in response to market uncertainties, with landlords likely to offer incentives such as customized renovations and improved service quality [4]

Group 1: Hong Kong Real Estate Market - The Hong Kong real estate market has not shown significant improvement in the first half of the year, but key factors are beginning to turn around [1] - A rebound in population and a significant drop in interest rates, including HIBOR, are expected to restore market confidence, with property prices projected to rise by 3% in the second half of the year and by 5% in both 2026 and 2027 [1] - The decline in HIBOR directly reduces mortgage rates, alleviating payment pressure and providing a good opportunity for first-time buyers and motivating upgrade purchases in the secondary market [1] Group 2: Residential Rental Market - The trend of divergence in residential prices and rental markets has continued into 2023, driven by population inflow and government talent introduction plans, which will increase housing demand and push short-term rental growth [1] - Rental prices are expected to rise by approximately 2% to 3% this year, with areas close to major business districts and key universities projected to see rental increases of at least 5% year-on-year [1] Group 3: Retail Market - Despite changes in tourist consumption habits and average spending levels, an increase in tourist numbers and a slowdown in consumption trends from mainland China are expected to benefit the dining and grocery sectors [2] - High-end shopping centers and core shopping areas are anticipated to remain stable through 2025, although non-tourist and core retail areas may face more significant pressure due to e-commerce challenges [2] Group 4: Office Market - The office market remains cautious, with vacancy rates slightly decreasing from a high of 13.7% in July 2024 to 13.5% in March 2025, but still at elevated levels [2] - Major projects set to complete between 2025 and 2026 will limit the rebound potential of the office market, with Grade A office rents expected to decline by 3% to 5% year-on-year until economic conditions improve [2]