Residential Market Regains Momentum

Hong Kong’s residential market strengthened in June, with 7,650 transactions, up 512 units from May and the highest monthly volume since the removal of property cooling measures in early 2024.

The rebound was led by the secondary market, where transactions rose to 5,657 units, while primary sales declined to 1,993 units. Mass residential capital values also increased 0.9% month-on-month.

Luxury demand remained active. A unit at Mont Verra in Kowloon Tong sold for HKD 210 million, equivalent to HKD 48,398 per sq ft.

However, the interest-rate outlook has become a key risk. Expectations of higher US rates have increased, which could moderate Hong Kong residential market growth in the near term. 

Central Leads the Office Recovery

Hong Kong’s office market also improved, recording 279,000 sq ft of positive net absorption in June.

The overall vacancy rate declined to 13.1%, while office rents edged up 0.1% month-on-month. Central remained the strongest submarket, with rents rising 0.6%, while Tsim Sha Tsui increased 0.5%.

Supported by IPO activity, wealth inflows from mainland China and expectations surrounding carried-interest tax incentives, Central Grade A office rents are forecast to rise 10% to 15% in 2026.

Performance is expected to remain uneven, with other core districts showing modest growth while Hong Kong East and Kowloon East face continued rental pressure.

Outlook

Hong Kong’s property market is showing clear signs of recovery, but momentum remains selective.

Residential activity is improving, although higher borrowing costs may limit further acceleration. In the office sector, Central Grade A space appears best positioned, supported by improving demand, tighter vacancy and stronger financial-sector activity.

The market is likely to favour prime locations and high-quality assets over broader market exposure.

The contents of this article were contributed by Nelson Li, Head of IQI Hong Kong.