A property analyst said the trend towards working from home has become a factor in the subdued commercial property market, in addition to the sluggish economy.

Cathie Chung, a senior director of research at real estate services company JLL, was speaking on RTHK's Hong Kong Today programme, after the government on Monday announced that the Queensway Government Offices in Admiralty would be converted into a new High Court building. This is a change from its plan in last year's Policy Address to relocate it to the Central Harbourfront, freeing up a potentially high-value plot there.

"Also the previous wave of working from home arrangement during Covid also shrank some corporate service space demand," she said. "Also the market is flooded with lots of supply, which heightens the vacancy rate and puts pressure on rentals."

Earlier this month, the government said it wouldn't hold any residential or commercial land tenders in the first three months of this year because of poor sentiment.

Chung said she believed the government's main reason for delaying the commercial land tenders was due to subdued demand. She said few developers were willing to acquire sites when there is still over 10 million square feet of Grade A office supply in the coming five years, meaning the government would get a very low price for the plots.

She said leasing demand was currently mainly driven by flight to quality, consolidation, and relocation for cost savings.

Chung said the Central Harbourfront plot, known as Site 5 and which had been zoned for a government institution, would be a good site for commercial use, such as retail or office building.

In a statement on Monday, the government said the Judiciary considered a joint development of the vacated site and the adjacent existing High Court Building desirable, as the larger development scale would allow more flexibility in design and contribute to the efficiency of court operations. It said the Development Bureau would separately review the specific use of Site 5 of the new Central Harbourfront.