Savills: expected Hong Kong luxury home prices to rise 5% to 10% for the whole year.

Savills' report pointed out that the prices of luxury homes in Hong Kong rose by about 2% in the second quarter of 2026, with a cumulative increase of 3.9% since the beginning of the year. The market has seen 12 consecutive months of price increases, with prices rebounding by about 10% from the low point recorded in March 2025. However, the total transaction amount decreased by 30% from 12.56 billion Hong Kong dollars to 8.76 billion Hong Kong dollars; the number of transactions also decreased from 70 to 48. Kelvin Ho, Executive Director of Valuation and Consulting Services at Savills Hong Kong, said that although China's new regulations on foreign investment may temporarily affect the intentions of some buyers to enter the market, the demand from high-net-worth individuals remains robust. With limited supply of luxury homes in prime locations and gradual improvement in the financial market environment, it is expected that the prices of luxury homes in Hong Kong will increase by about 5% to 10% in 2026. As for Grade A office buildings, the report stated that leasing activities in the second quarter of 2026 further strengthened, increasing by 23% to 1.1 million square feet. The cumulative leasing area in the first half of 2026 reached 2.1 million square feet, equivalent to 48% of the total for the whole year of 2025. The net absorption in the second quarter reached 569,600 square feet, leading to a cumulative net absorption of 945,000 square feet in the first half of 2026, a significant improvement from the negative 88,000 square feet recorded in the first half of 2025. Meanwhile, the vacancy rate continued to decline for two consecutive quarters due to lack of new supply, along with positive absorption in the market, bringing the overall vacancy rate for office buildings in Hong Kong down by 0.6 percentage points to 16.2%, declining for two consecutive quarters. Grade A office rents have resumed their upward trend, with overall office rents rising by 2% in the second quarter and a cumulative increase of 3.5% since the beginning of the year, reversing the downward trend in the second half of 2025. Savills predicts that Grade A office rents will increase by 4% to 6% for the whole year. In terms of retail shops, the report noted that leasing activities in core retail areas accelerated in the second quarter, with leasing transaction area increasing by 55% to 337,100 square feet. This brought the total leasing transaction volume for the first half of 2026 to 48% of the total for the whole year of 2025. The vacancy rate decreased by 0.3 percentage points to 6.5%, reaching the second lowest level since the fourth quarter of 2019. The low vacancy rate led to a 1% increase in rent in the second quarter, marking the 16th consecutive quarter of growth, with a cumulative increase of 18% since the beginning of the year. Savills predicts that rents for retail shops in core areas will increase by 3% to 5% for the whole year; while rents for major shopping malls are expected to increase by 0% to 5%.