Grade-A office rents in Hong Kong are seen to drop by up to a further 10% to 2012 levels, which could lower the valuation of the properties owned by the city's major landlords, according to a note by S&P Global Ratings released Thursday.

The forecast is steeper than the previous forecast of a 5% decline, according to the debt watcher.

Hong Kong's eight major landlords saw an average 19% decrease in office rent rates or rental income, but the fair value of investment properties slid 13%, due to a diversification of assets, S&P said.

The decline in office rents could see more distressed sales of office buildings, while the rise in new office buildings could intensify competition in the market, S&P said.

Landlords will also need to employ tenant retention tactics such as lowering the price of office rents, the report said.