Core Grade A Offices Lead Rental Recovery, Hong Kong Island High Streets Outperform Kowloon
- Residential Market: Q2 residential transaction numbers increased by 19% q-o-q and 32% y-o-y to reach more than 22,150 units. Home prices rose by 2.5% during April and May, bringing a cumulative 7.4% increase for the first five months, with growth recorded across different segments.
- Grade A Office Market: Citywide net absorption reached 396,100 sq ft in Q2, with new leases mainly driven by the banking & finance and insurance sectors. Core areas such as Greater Central witnessed significant rental pick up, offsetting rental corrections in non-core submarkets. Cushman & Wakefield expects the overall office market rental level to rise by +4% to +6% in 2026.
- Retail Market: Overall retail sales maintained steady growth on the back of sustained rises in inbound visitors and a stronger RMB. High street vacancy rates in Causeway Bay and Central remained at 0% in Q2, with Hong Kong Island leading a rental growth recovery.
- Capital Markets: Hong Kong's commercial real estate investment market sustained the momentum carried over from late 2025. Supported by demand from end-users and still-attractive pricing levels across property sectors, total large-sized (>HK$100 million) non-residential transaction volume for the 1H 2026 period recorded HK$23.2 billion, up 84% y-o-y.
HONG KONG SAR -
Media OutReach Newswire - 7 July 2026 - Global real estate services firm Cushman & Wakefield today held its
Hong Kong Property Markets 1H 2026 Review and 2H 2026 Outlook press conference. Residential market activity remained robust as transaction numbers surpassed 22,000 cases in Q2, the highest quarterly record since Q2 2021. Grade A office market net absorption reached 396,100 sq ft in Q2, with rental level recovery mainly driven by core areas. Greater Central rents continued to pick up by 4.1% q-o-q in Q2, supporting the citywide rental level to grow by 1.9% q-o-q. In the retail sector, total retail sales continued to recover steadily, while high street store vacancy in Causeway Bay and Central returned to 0%, supporting stronger rental performance on Hong Kong Island and outpacing Kowloon. In the capital markets, end-users and well-capitalized investors bottom-fished amid attractive office asset pricing. Living sector and residential site transactions are expected to be the market focus in the upcoming months.
Grade A office leasing market: Leasing momentum driven by banking & finance and insurance sectors, rental recovery led by core areas Driven by take-up at recent new entrants into the market, citywide office market net absorption reached 396,100 sq ft in the quarter, mainly led by Greater Central and Greater Tsimshatsui. The total new leased area reached 1.2 million sq ft in Q2, underpinned by activities from the banking & finance and insurance sectors. Rents in Greater Central continued to pick up, rising by a further 4.1% q-o-q in Q2 for total growth of 9.7% in 1H 2026, while rental level growth of 2.9% q-o-q was seen in Wanchai/ Causeway Bay. In contrast, rents in non-core areas remained soft, with all four non-core submarkets experiencing rental corrections in Q2 and 1H. The recovery in core areas has supported citywide rental growth of 1.9% q-o-q in Q2 and 4.3% for 1H 2026. In the absence of new completions in Q2, the overall availability rate fell by 0.5 percentage points q-o-q to 19.5%.
John Siu, Managing Director, Hong Kong, Cushman & Wakefield, said, "Despite the uncertainties arising from recent stock market volatility and geopolitical tensions, leasing demand from the banking & finance and insurance sectors is expected to remain resilient, backed by ongoing wealth management activities, an active IPO pipeline, and long-term operational needs from finance-related institutions. These two sectors accounted for around 60% of Grade A office new leased area in 1H 2026, compared with 38% in 2024. Following strong rental growth in Greater Central in 1H 2026, the upwards momentum is expected to moderate in 2H. Full-year rental growth in the submarket is projected in the +10% to +12% range. This will help offset the impact of rental corrections in certain non-core submarkets, and support the citywide Grade A office rental level to rise by +4% to +6% in 2026, revised upward from the previous forecast of +1% to +3%."
Retail leasing market: High street vacancy in Causeway Bay and Central holds at 0%, more overseas brands to establish presence in Hong Kong Sustained rises in inbound visitors, along with the wealth effect from an improving residential market and a stronger RMB, have continued to support steady growth in Hong Kong's retail market. As at May 2026, the city's overall retail sales marked thirteen consecutive months of y-o-y growth, while total retail sales for the January to May 2026 period recorded HK$171.5 billion, up 10.6% y-o-y. Sales growth was recorded in all key retail categories....
