1、 Disclosures&Disclaimer This report must be read with the disclosures and the analyst certifications in the Disclosure appendix,and with the Disclaimer,which forms part of it.Issuer of report:The Hongkong and Shanghai Banking Corporation Limited View HSBC Global Research at:https:/ Listen to our ins

2、ightsFind out moreHSBCGlobal InvestmentResearchPodcasts The office market has seen some pick-up in activity,supported by buoyant financial activities We expect rental downward pressure to prevail,but downside risks could be less than the market expected We see opportunities from growth strategies:Sw

3、ire Prop(Buy,TP HKD23.70),Hongkong Land(Buy,TP USD7.08)Boost from vibrant financial market:Improving financial activities,including IPOs and equity markets,bode well for this finance-centric city and the office market.Recent activity within office Central CBD has been a positive surprise for investo

4、rs,in our view.This includes a purchase of nine floors of One Exchange Square by HKEx(388 HK,Buy,CMP418.80),in terms of valuation,and the recent record office pre-leasing transaction of Central Harbourfront project by Jane Street,in terms of floor space and pricing.Is this an inflection point?We don

5、t think we are there yet.However,downside risks for HK office landlords could be less than the market had previously anticipated,in our view.Rental decline narrowed in 1H:According to Jones Lang LaSalle 2Q25 office statistics,overall HK office rents fell by 1.3%q/q,within which Central office market

6、 rents fell 0.8%q/q.However,the decline has been narrowing,with the Central office market down by 1.5%h/h in 1H25,versus-5.6%in 2H24.We note that both tenant enquiries and leasing renewals have increased recently,and overall occupancy saw a mild improvement.We believe the biggest challenge for the o