Knight Frank: Hong Kong's property prices are expected to increase by less than 5% in 2026.

The latest report "Hong Kong Real Estate Market Review for 2025 and Outlook for 2026" released by Knight Frank today (January 12) pointed out that as of October last year, residential prices in Hong Kong had increased by approximately 1.8% in total, with an expected total of around 62,000 residential transactions for the full year of 2025. Rosanna Tang, Executive Director and Head of Research at the company, anticipated that residential prices in Hong Kong in 2026 would increase by less than 5%. She noted that the Hong Kong residential market benefited from a sustained low interest environment last year, coupled with the wealth effect brought by the strong stock market performance, leading to a continued positive atmosphere in the property market and a rebound in prices by the end of the year. Transaction volume in 2026 is expected to be similar to this year, providing support for prices. Simon Wong, Managing Director of Knight Frank Hong Kong, stated that the office market showed a significant recovery at the end of last year. Net absorption in the fourth quarter was approximately 984,000 square feet, bringing the total absorption for 2025 to around 1.6 million square feet, a new seven-year high. The banking and financial sectors continue to be the main drivers of new leasing demand. Rents in Central District rose by about 1.9% per quarter, and overall office rents also saw a quarterly increase of about 0.4%. Looking ahead to 2026, overall office rents are expected to have a narrow fluctuation ranging from a decrease of about 1% to an increase of about 1%. In the retail market, as the number of inbound tourists increases, the retail sales atmosphere improved in the fourth quarter of last year. Multiple new lease transactions were recorded in Central District, mainly from banks, financial institutions, and high-end skincare brands. The overall retail property vacancy rate dropped to around 5.9% during the period. It is expected that retail rents will increase by about 2 to 3% in the first half of 2026. The logistics property market continues to be under pressure, despite overall trade performance showing growth, leasing demand remains weak. The vacancy rate for prime warehouses rose to approximately 11.2% in the fourth quarter of 2025, the highest since the outbreak of the pandemic, with rents falling by about 3.4% per quarter. It is projected that overall logistics property rents will decrease by about 7% in 2026. Kelvin Ko, Executive Director and Head of Capital Markets at Knight Frank Hong Kong, pointed out that in the capital markets, as interest rates have fallen and asset prices become more attractive, investment sentiment improved significantly in the fourth quarter. The total transaction amount for properties exceeding HK$100 million increased to around HK$19.1 billion, a quarterly increase of about 115%, with office properties accounting for approximately 87% of the total quarterly transaction volume. Looking ahead to 2026, the total property investment transaction amount is expected to be around HK$40 billion for the full year.