China Securities Co.,Ltd.: The Hong Kong residential market has confirmed a rebound trend following a period of decline, and the commercial market is currently experiencing structural improvements.

China Securities Co., Ltd. released a research report stating that residential property transactions in Hong Kong have increased significantly since March 2025, with the total number of first and second-hand private residential transactions expected to exceed 60,000 for the whole year of 2025, reaching the second-highest level in nearly 13 years, following only 2021. From March to May 2025, Hong Kong property prices hit a bottom, with second-hand residential prices expected to increase by 4.5% for the whole year. The firm believes that the increase in demand for asset allocation under the background of the Fed's interest rate cuts is the main reason for the rebound in residential property transaction volume and prices. The company predicts that in 2026, the transaction volume of private residential properties in Hong Kong will increase by 7.9% to 65,000 units, with second-hand residential prices increasing by 4.0%, benefiting developers with ample land reserves in Hong Kong. The Hong Kong office market is facing overall pressure but showing structural improvement, with domestic enterprises strengthening their business layout in Hong Kong, boosting the trading heat of office buildings. The conversion of office spaces into student apartments has become a new solution to address office vacancy. The rental situation of retail properties in core areas has improved. Key points from China Securities Co., Ltd. include: - Continuous increase in transaction volume and prices of residential properties in Hong Kong, with a recent rise in investment demand in the transaction structure. - The increase in demand for asset allocation for Hong Kong residential properties under the background of the Fed's interest rate cuts is the main reason for the current rebound in transaction volume and prices. - Pressure in the Hong Kong commercial market with structural improvement, increased demand from mainland buyers boosting the office market, and positive trends in the rental of retail properties in core areas. Risk analysis includes unexpected changes in the Fed's interest rate cuts, fluctuations in the economic and demographic fundamentals of Hong Kong and the mainland, and policy changes.