CRE Investment Sentiment Strengthens, Retail Performance Maintains Stability

• Residential Market: The sustained low-interest-rate environment and wealth effects from a buoyant stock market have supported improved housing market sentiment, leading home prices to bottom out and strengthen by 1.8% year-to-date (as at October). 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.

HONG KONG SAR - Media OutReach Newswire – 10 December 2025 — Global real estate services firm Cushman & Wakefield today held its Hong Kong Property Markets 2025 Review and 2026 Outlook press conference. Supported by a sustained low-interest-rate environment and wealth effects from a buoyant stock market, monthly residential transactions have exceeded 5,000 units for nine consecutive months, helping overall home prices to stabilize and show upward momentum. This positive trend is expected to continue into 2026. Meanwhile, the capital market has improved on the back of gradual interest rate cuts and attractive pricing across real estate sectors, with student accommodation and rental housing likely to remain sought-after. In the Grade A office sector, year-to-date net absorption recorded close to 1.1 million sq ft, with leasing activity more active in core districts. However, high availability will continue to weigh on overall rents, which are forecast to adjust within a narrow range of ±1% in 2026. As for the retail sector, overall retail sales have stabilized further, with the average high street vacancy rate continuing to decline. Overall high street retail rents are expected to see a modest increase 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...