J.P. Morgan — Hong Kong Offices: Proprietary Funds Miss Out on Tax Perks, but Recovery Intact
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Key Views
Central rents have rebounded 9% from the 3Q25 trough, with mid-single-digit growth expected in 2H26; Central offices remain J.P. Morgan's most preferred Hong Kong property sub-sector for 2H26. If 300 new asset managers/family offices lease 2,000 sq ft GFA each, totalling 600,000 sq ft—35% of JLL's forecast 2026 net absorption—overall Grade A vacancy falls from 13.1% to 12.5%, Central's from 8.8% to 7.3%. Hongkong Land (CBD offices 44% of GAV) is the best recovery proxy; Swire Properties (Pacific Place), Henderson Land (IFC, The Henderson, Central Yards), Champion REIT (not covered) and Sun Hung Kai's West Kowloon portfolio also benefit. Hong Kong hosts 2,358 licensed asset managers and 3,384 family offices; the proposed 0% rate undercuts mainland China's 45%, Singapore's 24% and the US 23.8%.
Outlook
Legislation is before a LegCo bills committee; second reading is targeted for 2H26, effective from the 2025/26 year of assessment. Watch Singapore's potential matching tax cuts and stricter mainland scrutiny of offshore trusts and insurance products.