Midland: First Three Quarters' Hong Kong Commercial and Industrial Property Registrations Continue to Hit a 5-Year High for the Same Period, Maintains Forecast of About 15% Year-on-Year Growth for the Full Year

According to data compiled by Midland Commercial Property Research from the Land Registry, Hong Kong's commercial and industrial property sales registrations totaled 3,963 cases in the first three quarters of 2026, up about 16.5% year-on-year, continuing to hit a new high for the same period in nearly five years. The registered value amounted to about HK$40.57 billion, with the year-on-year decline narrowing sharply to 0.2%, approaching the level of the same period last year. Ma Tai-yeung, CEO of MIDLAND HOLDING and Midland Commercial Property, described the trend of commercial and industrial properties as "gradually improving," noting that transactions continued to stabilize and cumulative registered value was gradually catching up to the same period last year, reflecting strengthened absorption capacity. However, the pace of recovery still varied across sectors, and banks remained conservative in approving mortgages for commercial and industrial properties, so it would take time for market confidence to fully recover. He maintained the forecast of about 5,200 commercial and industrial property sales registrations for the full year, an increase of about 15% year-on-year. For September 2026 alone, Hong Kong's commercial and industrial property sales registrations recorded 469 cases, rebounding 14.4% month-on-month; registered value recorded about HK$4.37 billion, down 4.3% month-on-month. Commercial and industrial property sales registrations have remained at 400 cases or above per month for seven consecutive months. Ma Tai-yeung noted that second-hand properties accounted for about 90% of overall registrations in September, serving as the main support for transactions that month, reflecting that the market was not primarily driven by first-hand new project launches. He believed that as some owners increased negotiating room, buyers would find it easier to identify properties matching their budget and return requirements, helping to consolidate the foundation for transactions. Office buildings continued to be the only category among the three major commercial and industrial property sectors to record cumulative growth in both value and volume. In the first three quarters, office building sales registrations totaled 1,015 cases, up 19% year-on-year, the highest increase among the three major sectors; registered value recorded about HK$20.02 billion, up 15.6% year-on-year. For September alone, office building sales registrations recorded 119 cases, down 16.2% month-on-month; registered value was about HK$2.01 billion, down 18.2% month-on-month. Ma Tai-yeung noted that he remained bullish on leasing and purchasing demand for office space in core districts. Although monthly transactions had recently declined, cumulative registrations and value in the first three quarters still rose year-on-year, indicating that market absorption capacity had improved compared with last year, and it was not appropriate to judge an overall weakening trend based on short-term fluctuations alone. In September, the vacancy rate of Grade A office buildings on the indicator further dropped to 8.5%, a new low since December 2020. Vacancy rates in traditional core business districts remained low, while Grade A office vacancy rates in emerging business districts such as East Kowloon, Kwai Chung, and Sha Tin also declined, recording 16.1%, 2.3%, and 2.2% respectively, reflecting continuously increasing demand for office space as enterprises gradually absorbed floor area in these districts. On the other hand, the Grade A office price index has fallen about 4.5% year-to-date, while the rental index rose about 1.7% over the same period. Ma Tai-yeung believed that declining vacancy rates and recovering rents would help improve the leasing return conditions of office buildings and also provide support for long-term buyers assessing market entry, but whether prices could fully stabilize would still depend on absorption capacity and the financial industry environment. In the shop market, September sales registrations recorded 110 cases, rebounding 12.2% month-on-month; registered value recorded about HK$1.30 billion, surging 62.3% month-on-month and hitting a one-year high. Cumulatively in the first three quarters, shop sales registrations recorded 926 cases, up 14.3% year-on-year; registered value was about HK$9.68 billion, down 21.4% year-on-year. Ma Tai-yeung said that the simultaneous rebound in both value and volume for shops in September brought a positive signal to the market. Particularly noteworthy was that monthly registered value for shops rose to a one-year high, mainly because September recorded five shop sales registrations worth between HK$50 million and HK$100 million, the most in a single month since November 2025, reflecting that mid-to-high-value properties were also gradually gaining buyer acceptance. He believed that at this stage, buyers would still focus on actual rental income, tenant stability, and district consumer demand for shops, rather than simply speculating on price rebounds. Shops located in core districts with well-developed transport infrastructure, best positioned to benefit from tourism, and with a solid leasing foundation were expected to be more easily absorbed; owners adopting market-close pricing would help facilitate transactions. In the industrial building market, September sales registrations recorded 240 cases, up 41.2% month-on-month, the largest increase in case count among the three major sectors; registered value recorded about HK$1.06 billion, down 19.0% month-on-month. Cumulatively in the first three quarters, industrial building sales registrations recorded 2,022 cases, up 16.2% year-on-year, continuing to be the most active category among the three major commercial and industrial property sectors; registered value was about HK$10.87 billion, down 1.5% year-on-year. Ma Tai-yeung noted that the significant increase in monthly registrations for industrial buildings alongside a decline in value reflected that transactions that month leaned toward lower-priced properties. Cumulative registrations in the first three quarters maintained significant growth, while cumulative registered value had approached the level of the same period last year, indicating that the market's absorption foundation was gradually improving. The industrial building vacancy rate dropped to 4.2%, a new low since November 2024. Ma Tai-yeung believed that the decline in vacancy rate reflected improved absorption of industrial floor area, providing support for both the leasing and sales markets of industrial buildings. Industrial and warehouse properties with practical layouts, convenient transport and logistics infrastructure, and reasonable pricing were expected to continue attracting attention from users and investors. Looking ahead, Ma Tai-yeung believed that the commercial and industrial property market was gradually warming up in terms of transactions, with leasing performance also improving, and the overall market condition was "gradually improving." The Federal Reserve restarted rate hikes in September, but the likelihood of further hikes was uncertain; however, the market generally believed that Hong Kong mortgage rates might not necessarily rise in tandem. More importantly, because banks had always been cautious in approving mortgages for non-residential properties, financing conditions in the commercial and industrial property market were already relatively tight, so the direct impact of this rate hike on the market was expected to be relatively limited. Nevertheless, it was still necessary to watch whether the increased return attractiveness of fixed-rate products might attract some capital inflows, putting pressure on commercial and industrial property investment from capital diversion. Taking into account both transaction and leasing performance, Ma Tai-yeung maintained the forecast of about 5,200 commercial and industrial property sales registrations for the full year, expected to increase about 15% year-on-year. The fourth quarter market was expected to continue to primarily absorb properties with leasing support, reasonable returns, and attractive pricing. Among them, quality office buildings in core locations, shops in mature residential districts, and industrial buildings with actual usage demand were expected to remain key focuses for buyers.