Pu Qian: It is expected that the Hong Kong residential property market will continue to be strong and prices will remain stable in 2026. However, there is still pressure on the adjustment of commercial and industrial properties.

The Pacific Group's report "Hong Kong Property Market Review: Sitting in 2025, Looking to 2026" points out that looking ahead to 2026, it is expected that local residential property prices in Hong Kong will remain stable, with some popular areas seeing slight increases. With the continuous increase of non-local students and professionals, the residential rental market is expected to remain strong, with rents expected to approach historical highs. Amid continuing uncertainties in the global political and economic situation, the residential property market in Hong Kong benefited from policy adjustments, a low interest rate environment, and continued entry of mainland buyers in 2025, resulting in a significant increase in transaction volume, as well as price and rent increases, demonstrating a stable market performance. On the other hand, the non-residential property sector continued to face adjustment pressures, with a slower pace of recovery. It is expected by the Pacific Group that the residential market in 2026 will remain stable, with some sectors possibly experiencing slight increases, while non-residential properties will still need time to digest the supply and await demand recovery. Benefitting from an increase in the stamp duty threshold to HKD 4 million, a low interest rate environment, and various talent attraction policies, the atmosphere in the Hong Kong residential property market significantly warmed up in 2025, with the annual transaction volume reaching nearly 57,000, representing a year-on-year growth of approximately 7.3%. Among them, 18,800 transactions were for new and second-hand residential properties respectively, reflecting a gradual release of market purchasing power. There was a significant increase in transactions for residential properties below HKD 4 million, with mainland buyers accounting for over 20% of the overall residential transactions, and even higher for some new developments at up to 30%. Regarding commercial properties, the report mentioned that the overall performance of the non-residential property market in 2025 was weak. Prices of commercial buildings, office buildings, and industrial buildings fell by around 8.8%, 11.1%, and 12.3% respectively, with rents also seeing synchronous adjustments. Prices for Grade A, Grade B, and Grade C commercial buildings were adjusted downwards by about 9.9%, 15.3%, and 11.3% respectively, with market vacancy rates remaining high. Although the demand from financial and professional services has stabilized prime office rents in some core areas, rents in non-core areas continue to be under pressure. The industrial and warehouse market was affected by uncertainties in global trade and a decrease in local logistics demand, with rents falling by about 4.2% in the first ten months of 2025. The Hong Kong government actively optimized measures for the reconstruction and renovation of industrial buildings, releasing industrial land in urban areas, but the Pacific Group believes that the industrial market will still need time to adjust in the short term. In terms of retail properties, overall rents fell by about 4% in the first ten months of 2025, with vacancy rates for core area shops remaining stable. The expected increase in tourist numbers is likely to drive growth in retail and food service industry income, but rents for non-core area shops continue to be under pressure due to changes in consumer patterns. The report also points out that the Hong Kong government's active efforts to attract talent and increase non-local student quotas at tertiary institutions will help to rejuvenate the population structure, alleviate the aging population issue, and provide long-term support for the development of the real estate and consumer markets. The redevelopment of the northern metropolitan area and urban areas will be a key focus of future development, with the authorities actively promoting revitalization in multiple areas, transportation infrastructure development, and industrial upgrading, further enhancing land and property values.