In Hong Kong SAR and in Mainland China, we have observed an increase in the relative bargaining power of office tenants to negotiate their leases. A variety of factors, including a stronger supply of new office buildings and more negative economic sentiment among office tenants, have contributed to the evolution of landlord-tenant dynamics.

The Policy Address 2023 was delivered by the Hong Kong SAR Chief Executive, John Lee (“CE”) on 25 October 2023. In addition to some expected initiatives to further promote the principle of “One Country, Two Systems” and further enhancements of National Security, the CE has introduced 73 new initiatives in what was probably one of the longest ever policy address speeches.  Alongside the key initiatives to increase land and housing supply, the CE is also promoting various real estate, infrastructure and development projects to combat the slow-moving economy and a lacklustre property market. We set out a list of key takeaways which are relevant to our firm’s practice in the real estate and infrastructure space. There are also other key areas which others may focus on such as the long awaited need to reform the GEM listing approach.  A new listing route for R&D focussed companies will be created with new Listing Rules being promised for Q1 2024. An important boost for the financial services sector.

In view of the rising popularity of green leases in various markets and the continued significance of sustainable practices, green leases must become an essential development in Hong Kong SAR. There is a wide range of sustainability standards, tenant obligations and methods for incorporating green practices – there is also a need for landlords and tenants to create a tailor-made solution in special circumstances for certain types of tenancies. We will explore best practices for specific sustainability requirements with more specific examples in Part 2 of this series.