Hong Kong Rating and Valuation Department: Hong Kong's residential property market fully recovered last year with completion rates expected to continue falling in 2021 and 2022.

On April 24th, the Hong Kong Rating and Valuation Department officially released the "Hong Kong Property Report 2026." It mentioned a full recovery of the residential property market in Hong Kong in 2025. Against the backdrop of a flourishing Hong Kong economy, the residential property market fully recovered in 2025. Benefiting from the strong performance of the local financial market in 2025 and the interest rate cuts, the sales market rebounded significantly in a positive market atmosphere. After three consecutive years of decline, prices recorded a moderate increase, while transaction volume reached a four-year high. Rental performance continued to improve throughout the year. On the other hand, the non-residential property market remained soft, but the market sentiment improved. Transaction volumes for all categories significantly increased, and the decline in prices and rents narrowed throughout the year. In terms of residential properties, in February 2025, the Hong Kong government raised the cap on the token property transaction stamp duty from 100 Hong Kong dollars to 4 million Hong Kong dollars, which improved market sentiment. The residential sales market stabilized in the first quarter of the year. Additionally, the strong performance of the local stock market in Hong Kong and interest rate cuts helped drive residential prices upwards by the end of the year, recording a moderate increase of 2.5% compared to the fourth quarter of 2024 and 2025. The transaction volume for both primary and secondary sales markets in 2025 increased to a total of 62,832 transactions, an 18% increase from the previous year, with the number of transactions below 4 million Hong Kong dollars increasing. Driven by the urgent demand of newly arrived individuals in Hong Kong, including those entering Hong Kong through various talent admission programs and non-local students studying in Hong Kong, the leasing market in Hong Kong continued to show positive performance throughout the year. Residential rents rose by 4.1% in the fourth quarter of 2025 compared to 2024. Market returns for various types of residential properties slightly increased by the end of the year, ranging from 2.4% to 3.7%. In 2025, the number of completed private residential units was 18,448, a 24% decrease from 2024, most of which were medium-sized units. The number of units occupied was 19,365, a 12% increase from 2024. The vacancy rate at the end of the year was 4.3%, equivalent to 56,081 units. The forecast completion volumes for 2026 and 2027 are 16,975 units and 15,362 units, respectively. As for office buildings, with interest rate cuts, expansion of the financial and professional services industries, and the establishment or expansion of operations by large technology companies in Hong Kong, the office market atmosphere improved overall. Transaction volumes in 2025 increased by 71% from the previous year. However, the substantial supply accumulated over the past years continued to put pressure on the office market. Compared to the fourth quarter of 2024, the overall office prices narrowed by 13.6% in 2025, with Grade A, Grade B, and Grade C office prices dropping by 11.9%, 18.1%, and 12.8% respectively. Overall office rents also declined by 3.2% during the same period, with Grade A, Grade B, and Grade C office rents decreasing by 4.0%, 2.6%, and 1.7% respectively. The completion volume in 2025 surged to 299,200 square meters, with Grade A office completion volume equivalent to 289,200 square meters, of which 182,100 square meters came from Yau Tsim Mong. In 2025, only Central and Western districts and Yau Tsim Mong provided a combined completion volume of 10,000 square meters for Grade B office spaces, with no completion volume for Grade C offices. The overall vacancy rate rose to 17.6% of the total stock by the end of the year, equivalent to 2,385,700 square meters. The vacancy rates for Grade A, Grade B, and Grade C offices were 18.4%, 17.4%, and 12.9% respectively. In the core areas, the vacancy rates for Grade A offices ranged from 11.1% to 18.5%, with lower vacancy rates in Tsim Sha Tsui and Central. The forecast completion volumes for Grade A offices in 2026 and 2027 are 142,700 square meters and 125,000 square meters respectively. In 2026, Wan Chai will account for the largest share of Grade A office completions, occupying 58% of the estimated total completion volume of 108,100 square meters. In 2027, Yau Tsim Mong will have the highest number of Grade A office completions, occupying 60% of the forecast completion volume of 78,100 square meters. The forecast completion volumes for Grade B offices in 2026 and 2027 are 34,300 square meters and 46,900 square meters respectively. As for Grade C offices, there will be a completion volume of 300 square meters in 2026 but none in 2027. In terms of private residential properties, the completion volume in 2025 was 18,448 units, a 24% decrease from the previous year. Kowloon and the New Territories accounted for 49% and 36% of the completion volume respectively, with the remaining 15% coming from Hong Kong Island. Kowloon City had the highest number of completed units, accounting for 28%, followed by Sai Kung at 11%, and Sham Shui Po and Tai Po at 9% each. The forecast completion volumes for 2026 and 2027 are 16,975 units and 15,362 units respectively. In 2026, the new completion volume will mainly focus on the New Territories, accounting for 58% of the total forecast completion volume. Tai Po will account for 19% of the new completed units, while Sai Kung will account for 15%. In 2027, the New Territories will continue to be the main supply region, accounting for 51% of the forecast completion volume. By region, Kowloon City will provide 34% of the completion volume, followed by North District and Tuen Mun at 19% and 18% respectively. Residential prices slightly declined in the first quarter of 2025, but with the Hong Kong government's announcement of an increase in the upper limit for the token property transaction stamp duty, stimulating suppressed property demand, prices started to rise from the second quarter onwards. Moreover, with the vigorous growth of the local economy, strong performance of the local stock market, and interest rate cuts, residential prices maintained an upward trend by the end of the year, recording a moderate increase of 2.5% compared to the same quarter in 2024. The leasing market also continued to benefit from talent inflows and student housing demand, with residential rents steadily rising throughout 2025, with a 4.1% increase in rents in the final quarter compared to the same quarter of the previous year. Looking ahead, stable national development and high-quality growth, combined with the Hong Kong SAR government's innovative thinking to align with China's "14th Five-Year Plan," expanding economic capacity, and driving competitiveness tailored to local conditions, are expected to provide confidence for Hong Kong and its property market and help mitigate the uncertainties brought about by the complex and changing global situation.