- Total residential transactions for the full year 2025 are expected to reach approximately 62,000 units. Transaction numbers in 2026 are forecast to remain broadly in line with this year's level, with home prices projected to rise by up to 5%.
- Grade A Office Market: Rents stabilized in Q4 (as at mid-November), with the year-to-date decline narrowing to 4.1%, while net absorption reached 1.1 million sq ft. Rents are projected to fluctuate within a narrow range of ±1% in 2026, with Greater Central and Greater Tsimshatsui likely to outperform.
- Retail Market: Supported by rising tourist arrivals and more stable local consumption, retail sales performance continued to recover. The average high street vacancy rate fell further to 6.6% in Q4, the lowest since the pandemic, while high street rental performance remained more resilient in Central and Mongkok. Overall high street retail rents are anticipated to increase modestly in a range of 2% to 3% in 1H 2026.
- Capital Markets: Market sentiment showed signs of recovery, driven by gradual interest rate cuts and attractive pricing across property sectors. Year-to-date transaction volume of non-residential big-ticket deals (>HK$100 million) recorded HK$34.0 billion (as at December 8). The rental housing sector is expected to retain strong growth potential in 2026.
Grade A office leasing market: Demand underpinned by banking & finance sector, while Greater Central rents picked up
Hong Kong's Grade A office market gained momentum in Q4 (up to mid-November), with overall net absorption rising to 476,000 sq ft — the highest level after Q2 2019 — bringing year-to-date cumulative net absorption to nearly 1.1 million sq ft. This growth was supported by improved market sentiment and more attractive office property pricing levels and rents, prompting occupiers to purchase available space and driving net absorption performance. On the supply side, the completion of Cyberport 5 in Q4 added 230,000 sq ft to the market; however, the overall availability rate fell to 18.8% due to the increase in net absorption.
Boosted by initial public offering (IPO) activity, Grade A office demand and leasing momentum strengthened. Greater Central rents increased by 1.6% q-o-q (November vs September) in Q4, while Prime Central office rents rose by 2.5% q-o-q, bringing overall rents to stabilize at +0.1% during the same period. As a result, the overall rental decline narrowed to 4.1% for the year-to-date.
John Siu, Managing Director, Hong Kong, Cushman & Wakefield, said, "Up to mid-November, the Hong Kong Grade A office market registered 1.1 million sq ft of positive net absorption for the year-to-date. The financial sector, buoyed by active IPO activity, drove leasing demand from both upstream and downstream industries, and accounted for over one-third of the new leased area in Q4. As a preferred submarket for banking and financial institutions, Greater Central rents also picked up during the quarter. Looking ahead, with 1.4 million sq ft of new Grade A office supply to be completed in 2026, the high availability rate will likely remain weighing on rents. We forecast overall office market rents to stay within a narrow range of ±1% throughout 2026. Nevertheless, flight-to-quality activity should enable Greater Central and Greater Tsimshatsui to outperform the market."
Retail leasing market: Retail sector stabilized as high street vacancy hit post-pandemic low
Sustained growth in visitor arrivals and steadier local consumption sentiment have supported Hong Kong's retail sales to continue to pick up. The city's overall retail sales have recorded y-o-y growth for six consecutive months since May, suggesting a turnaround from the previous sluggish performance in the retail segment. Total retail sales for the January to October period reached HK$311.7 billion, with the y-o-y decline narrowing to -0.2%. Among major retail categories, the Medicines & Cosmetics, Food, Alcoholic Beverages & Tobacco, and Jewellery & Watches sectors registered moderate y-o-y growth.
The overall high street vacancy rate further dropped to 6.6% in Q4, the lowest level since the pandemic. Central district stood out with the strongest leasing momentum, as its vacancy rate fell significantly to 4.3% from 10.0% in Q3, supported by several notable large-sized transactions. Elsewhere, vacancy in Tsimshatsui moved down to 8.3%, while Causeway Bay remained steady at 7.9%. Mongkok saw a mild uptick, reaching 6.1% in Q4.
Backed by lower vacancy rates and relatively robust local consumption, high street retail rents in Central and Mongkok demonstrated stronger resilience, holding steady and dipping slightly by 1.1% y-o-y, respectively (Chart 2). On the other hand, despite more active leasing activity in Causeway Bay and Tsimshatsui, retail rents declined by 7.3% and 8.0% y-o-y, respectively, due to the further entry of affordable brands and landlords' more pragmatic negotiation approach. Regarding F&B performance, elevated availability among dining spaces continued to weigh on rents, with y-o-y declines ranging from -0.3% to -3.6% across Mongkok, Central and Causeway Bay. Tsimshatsui F&B rental levels remained generally firm, supported by new leases for premium seaview outlets. Landlords are broadly willing to retain existing restaurant fit-outs and equipment, reducing setup costs and making spaces more attractive to incoming tenants.
John Siu commented, "Although several retail districts experienced y-o-y rental declines in 2025, overall new leasing activity was relatively vibrant. We believe rents at prime retail streets with the highest footfall have now stabilized. Some new tenants are also now willing to commit to leases at rental levels comparable to previous leases, demonstrating anticipation of future rental performance growth. We expect overall high street retail rents to pick up by 2% to 3% in 1H 2026, while F&B rents are likely to remain under pressure until available spaces have been absorbed.
"It is also worth noting that approved private vehicles from Guangdong under the Southbound Travel for Guangdong Vehicles scheme will be allowed to enter Hong Kong urban areas via the Hong Kong-Zhuhai-Macau Bridge from late December, and we can expect this to bring in a new wave of higher-spending visitors to the city's signature malls and retail hotspots. This is likely to further lift overall retail sentiment, and we hope the government will consider expanding the daily quota for southbound vehicles under the scheme."
Residential market: The low-interest-rate environment and a buoyant stock market support more positive housing market sentiment, 2026 home prices to see up to 5% upside
With local banks following the U.S. Federal Reserve's rates cut to lower mortgage rates, entry barriers and financing costs for homebuyers have eased. Coupled with wealth effects from a buoyant stock market, housing demand has been further unlocked amid improving market sentiment. Since March, the monthly number of residential sales and purchases agreements has exceeded 5,000 for nine consecutive months. Total residential transactions in Q4 are estimated to reach approximately 16,400 units, up 9% y-o-y, bringing the full-year transaction number to 62,000 units, up 17% y-o-y (Chart 3). Developers have actively launched primary market projects at competitive prices throughout the year, with primary sales accounting for 33% of total transactions for the January to October period.
Rosanna Tang, Executive Director, Head of Research, Hong Kong, Cushman & Wakefield, added, "Aided by stronger transaction numbers, the city's home prices started to stabilize in March, beginning to rise from April onwards. According to the Rating and Valuation Department (as at October), the overall residential price index has picked up by approximately 3.3% between March and October, bringing year-to-date home prices to a bottom-out point and to then move upwards by 1.8%. This indicates that the residential market has now turned around and is entering the recovery phase. Meanwhile, the residential rental index continued to trend up, driven by ongoing demand from incoming expats and non-local students, rising 4.0% year-to-date. With the easing of interest rates, more investors and renters are now encouraged to enter the market, providing positive support to both transaction numbers and property prices. We anticipate full-year transaction numbers in 2026 to remain similar to the 2025 level, with home prices to pick up further by up to 5%.
Edgar Lai, Senior Director, Valuation and Consultancy Services, Hong Kong, Cushman & Wakefield, highlighted, "Residential market sentiment continued to strengthen in Q4. Our Cushman & Wakefield mid-and-small size units price index shows that, as at early December, home prices rose by around 3% from the end-of-2024 level, in line with the upper limit of our previous forecast. At the same time, our tracking of popular housing estates demonstrates that prices across different market segments recorded growth through the quarter. Prices at City One Shatin, representing the mass market, and Taikoo Shing, representing the mid-market, both increased by 2.9% q-o-q. Residence Bel-Air, representing the luxury segment, recorded a notable 6.1% q-o-q rise. Although verbal enquiries from banks in November have slightly eased from October, the level was still 15% higher than the same period last year, underscoring the sustained recovery in market sentiment, and setting the positive tone and outlook for the year ahead."
Non-residential investment market (deals exceeding HK$100 million): Capital market sentiment improved, end-user buyers relatively active
Supported by gradual interest rate cuts and attractive pricing across property sectors, end-user buyers and cash-rich investors continued to seek bottom-fishing opportunities, signaling signs of recovery in Hong Kong's real estate investment sentiment. As at December 8, the non-residential investment market for deals exceeding HK$100 million recorded 63 transactions in 2025, with total transaction volume rising 11% y-o-y to HK$34.0 billion (Chart 4). By deal count, 43 deals were concluded in 2H 2025 — more than double the combined total of 20 deals recorded in 1H 2025 — indicating stronger investment activity in the second half of the year. In 2H 2025, Chinese capital accounted for approximately 48% of total transaction volume by consideration, chiefly driven by several large-ticket self-use purchases. However, foreign capital remained cautious and largely absent from the city's real estate investment market.
Tom Ko, Executive Director and Head of Capital Markets, Hong Kong, Cushman & Wakefield, concluded, "In 2025, office property transactions accounted for the largest share by both investment consideration and deal count, signaling a market that is somewhat recovering. In fact, the market has seen more end-user buyers purchasing office assets amid attractive pricing, as well as investors bottom-fishing prime office assets in core areas. A very notable transaction was the acquisition by Alibaba and Ant Group — facilitated by our team — of multiple floors at One Causeway Bay for approximately HK$7.2 billion for use as their headquarters in Hong Kong, demonstrating corporates' confidence in the city's business environment.
"The government's proactive efforts in establishing the Study in Hong Kong brand and launching the Hostels in the City Scheme have also boosted the student accommodation and rental housing sectors, both of which command resilient demand and stable rental incomes while demonstrating strong growth potential. For instance, two- and three-star hotels and assets with conversion potential have been most sought-after by investors. By deal count, the hotel and rental housing sector accounted for close to one-fourth of the total transaction number. We believe investors will continue to look for assets with stable rental returns, especially in the increasingly promising student housing sector. We expect total investment volume to pick up steadily and record around HK$40 billion in 2026, mainly driven by local and Chinese mainland capital."
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(From left to right) Edgar Lai, Senior Director, Valuation and Consultancy Services, Hong Kong, Cushman & Wakefield; Rosanna Tang, Executive Director, Head of Research, Hong Kong, Cushman & Wakefield; John Siu, Managing Director, Head of Project and Occupier Services, Hong Kong, Cushman & Wakefield and Tom Ko, Executive Director and Head of Capital Markets, Hong Kong, Cushman & Wakefield.
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About Cushman & Wakefield
Cushman & Wakefield (NYSE: CWK) is a leading global commercial real estate services firm for property owners and occupiers with approximately 52,000 employees in nearly 400 offices and 60 countries. In Greater China, a network of 23 offices serves local markets across the region. In 2024, the firm reported revenue of $9.4 billion across its core services of Valuation, Consulting, Project & Development Services, Capital Markets, Project & Occupier Services, Industrial & Logistics, Retail, and others. Built around the belief that Better never settles, the firm receives numerous industry and business accolades for its award-winning culture. For additional information, visit www.cushmanwakefield.com.hk or follow us on LinkedIn (https://www.linkedin.com/company/cushman-&-wakefield-greater-china).
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