- HK residential properties should have bottomed out, backed by positive carry upon easing interest rates and rising rents, and falling supply from FY26-28
- Retail properties are also expected to be supported by the positive wealth effect from the stock market and surging tourism due to Hong Kong’s policy efforts
- Offices show early signs of stabilisation upon revived capital market activities in Hong Kong, but current supply-demand imbalance will remain a drag
- Physical property is increasingly compelling given appreciation potential from improving supply-demand backdrops and its inflation-hedging qualities
- The emergence of new catalysts such as further confirmation of home purchase revival, meaningful uptick in transactions and firming up of selling prices would warrant further re-rating of the sector
Related Insights
Hong Kong’s property market, long battered by interest rate hikes, geopolitical jitters and a post-pandemic hangover, appears poised for a pivot in 2026. After a 24% plunge from its 2021 peak, the sector is showing flickers of life, buoyed by falling borrowing costs, a resurgent stock market and an influx of mainland talent. Yet, as ever in this high-stakes financial hub, optimism is tempered by oversupply and external uncertainties. With the Hang Seng Index up 28% in 2025, the wealth effect is trickling into bricks and mortar – though not a full-blown boom just yet.
Residential market: Embracing multiple tailwinds. Hong Kong’s residential sector, long a perennial soap opera of sky-high prices and cramped flats, is finally staging a comeback. Mortgage costs have eased markedly alongside the US’ multiple rate cuts. Concurrently, average rents have surged, driven by the Top Talent Pass Scheme (TTPS), which funnelled over 260,000 professionals and their families (accounting another c.240,000 population) into the city from end 2022 to Dec 2025. With surging rents, lower prices, and falling mortgage rates flipping the script on “positive carry”, investor interest is naturally returning. According to estimates from JLL, TTPS holders are projected to add c.12,000 units of annual leasing demand through 2027, 70% of whom rent private homes. Expat recovery is also rebounding – after years of brain drain, Hong Kong’s population stabilised at 7.53mn in mid-2025, bolstered by 18.2k net inflow from mid-2024 to mid-2025 (or +180k from mid-2022). Non-local student visas are set to hit 90,000 by 2026, further propping up rentals.
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