In Hong Kong's commercial real estate market, 'everybody has their own fair share of pain'

Commercial real estate market in Hong Kong has buckled under the crushing weight of China 's economic malaise, a change in Hongkongers ' consumption habits, an exodus of global firms fleeing due to geopolitical tensions, a supply glut and high interest rates.

Property valuations have been dragged down by high vacancy rates and sliding rental income.

As rental incomes plummet and valuations shrink, more property owners are struggling to meet their debt obligations.

HSBC , Hong Kong's largest lender, reported having a total of US$3.2 billion in defaults on its books from commercial real estate lending in the city in the first half of the year .

Hang Seng Bank's non-performing-loan ( NPL ) ratio is 5.32 per cent from six months ago and is the highest point in more than 30 years .

Banks are in a precarious position because if they call the loans, their clients will likely default, which could ripple outward and metastasise into more severe problems.

Omega is expanding its footprint on Russell Street , paying HK$400,000 a month for a new space, a discount of more than 70 per cent from a peak in 2018 .

"The current downturn will be more lengthy, deeper, and more complicated than any cycle Hong Kong has ever gone through before," Deloitte 's Ho said.