appConfigEntityId

bodyType

customContents

entityId

entityUuid

isVideo

articlePageQuery

article

articleSchemaContent

content

hooksArticlePageAdvertisementConfigArticle

hooksArticlePageFloatingButtonConfigArticle

appConfig

filter

json

liveArticle

Cheryl Arcibal

Hong Kong’s property market is poised for a broad-based recovery as a strong upturn in the residential segment spills over to the struggling office and retail sectors, according to analysts.
Morgan Stanley upgraded its forecast for the city’s home prices to a 12 per cent increase this year from 10 per cent previously and anticipated another 5 per cent rise in 2027, it said in a report on Monday.
Likewise, the office property segment was likely to see some relief, with Hong Kong’s top business district of Central set to see rentals rise from a previous forecast of 3 per cent to 5 per cent, the US investment bank added. West Kowloon, the district seen as Hong Kong’s main cultural hub, is also tipped to see growing demand for office space.
Meanwhile, retail sales were buttressed by rising tourist numbers, a string of mega-events and the stronger yuan, leading to a higher forecast for sales this year, up 5 per cent compared with an estimate of 3 per cent previously, the New York-headquartered bank said.
As of the first quarter, shop rents in the city had declined 1.1 per cent from a year earlier. Morgan Stanley forecast that rentals would “turn positive by year-end” although for the entire year a 3 per cent decline was likely. In 2025, rents fell 10 per cent.
“We see office and retail following very strong home price increases in Hong Kong,” said Praveen Choudhary, head of Hong Kong and India property research at Morgan Stanley.

“We continue to be constructive on Hong Kong property,” Choudhary said. “We remain bullish on residential with a new home price upcycle backed by favourable supply/demand dynamics, and turn more positive on office and retail with better-than-expected recovery seen in fundamentals.”
In March, Hong Kong’s lived-in home prices climbed to a 28-month high as an official index jumped 1.4 per cent month on month, according to the latest data.
Home sales also kept pace, with transactions breaching 6,000 units for the second consecutive month in March, according to data from the Land Registry. That compared with monthly figures ranging from 3,200 to 5,955 in 2025.
In April, new home sales were estimated to have risen to a 24-month high of 2,577 transactions worth HK$35.02 billion (US$4.47 billion), an amount that was a 10-month high, according to Centaline Property Agency. Given the estimates, primary transactions in April would have been 82.2 per cent and 57.8 per cent higher than March, respectively, which had 1,414 transactions and HK$18.25 billion in sales.
The increase in new home sales also boosted overall property deals covering offices, retail shops, car parking spaces and industrial units, which collectively rose to a four-month high of about 8,688 transactions, with total value of about HK$73.6 billion.
The government is set to release official data on the number of property registrations in April this week.
Recent property launches have seen robust demand, with flats selling out during rounds at Pavilia Farm III in Sha Tin, One Victoria Cove I in Hung Hom and the La Mirabelle I in Tseung Kwan O.
“Sell-through rates for new project launches have been close to 100 per cent and [prices] for subsequent launches have been higher,” Choudhary said.
The strong sales momentum has reduced overall home inventories by 26 per cent from their peak in the first quarter of 2025 to 16,700 units in the first quarter of this year, data cited by Morgan Stanley showed.

Hong Kong residents also had a more bullish view of the residential property sector, according to a survey of 804 adults conducted by Citi and Citi’s Research Innovation Lab between March and April.
The survey showed that 65 per cent were more optimistic about the residential segment than six months ago, with 42 per cent anticipating higher prices and another 42 per cent expecting stable prices for the next 12 months.
For those expecting price increases, 54 per cent saw gains of between 5 per cent and 10 per cent, while 16 per cent believed an increase of more than 10 per cent was possible. On average, the bullish cohort expected prices to increase 6 per cent in a year and the upcycle to last 4.4 years.
In the office segment, Morgan Stanley noted that while overall rents were still down, rents in Central had improved by 3.8 per cent in the first quarter of 2026 from a year ago, while vacancy rates dropped 190 basis points to 9.6 per cent as of March.
As for retail sales, with an 11.8 per cent increase in the first two months of 2026 compared with a year earlier, the investment bank upgraded its forecast mainly due to a surge in sales of consumer durables and luxury products such as jewellery and gold.
“Supermarket and apparel remain mostly flat,” the bank said, but it expected improvements in the second half.
The same trends were observed by Morningstar, which noted that the recovery in the housing market had held up despite the uncertainties brought about by the US-Israel war on Iran.
“We believe higher rental yields, underpinned by continued growth in housing rents, should continue to drive end-user and investor demand, helping to support transaction volumes,” said Kathy Chan, equity analyst at the investment research firm.
As for the office segment, Chan said a healthy pipeline of initial public offerings was underpinning demand from the financial and professional services sectors in the greater Central area, alongside the flight-to-quality trend.
Morningstar added that the retail sales recovery would continue to be spurred by a further increase in tourist arrivals, supporting “retail space demand and gradual rental improvement”.


Amazon and Shorea Capital deals underscore foreign interest in commercial property

Despite higher costs, Hong Kong’s student residences attract mainland Chinese renters

Why a hawkish US Fed won’t derail Hong Kong’s property recovery

Once the world’s most-visited city, Hong Kong now converts hotels into student dorms

Hong Kong property

Hong Kong residential property upturn drives recovery in office, retail: Morgan Stanley

A view of Admiralty and Central is seen through the glass windows of the Hong Kong Convention and Exhibition Centre in Wan Chai, April 14, 2026. Photo: Jelly Tse

Prospective buyers queue at the Lai Chi Kok sales office of Pavilia Farm III on April 18, 2026. Photo: Jelly Tse

A view of Sino Land’s La Mirabelle residential project. Photo: Jelly Tse

Hong Kong homebuyers flock to new launches as flats sell out swiftly

Pavilia Farm III is coming up above Tai Wai MTR station Photo: Handout

Prospective buyers queue up at the sales office of Pavilia Farm III on April 18, 2026. Photo: Jelly Tse

Hong Kong home prices rise to 28-month high as buyers shrug off Middle East war concerns

As a thick fog gathered over Yuen Long, Hong Kong’s property prices rose by 1.4 per cent in the first quarter of 2026 and rents grew for the fifth month in a row. Photo: Eugene Lee

Frenzy for Hong Kong luxury homes set to continue after 156% sales rise in first quarter

Luxury homes and residential buildings on Mount Kellett Road, The Peak. Photo: Roy Issa

Lisa Kan Chin Chin, the manager of Hong Kong singer and actor Eason Chan, bought a 3,627 sq ft flat at The Corniche in Ap Lei Chau for about HK$141 million in March. Photo: Google Maps

Business

Property

News

Hong Kong & China

Hong Kong

Hong Kong Economy

Shop rents will ‘turn positive by year-end’ but likely post a 3 per cent decline for the entire year, Morgan Stanley says


Shop rents will ‘turn positive by year-end’ but likely post a 3 per cent decline for the entire year, Morgan Stanley says.


Hong Kong residential property upturn drives recovery in office, retail: Morgan Stanley

.css-1c6uqr6{color:inherit;font-weight:inherit;font-size:inherit;font-family:inherit;line-height:inherit;overflow-wrap:break-word;}Shop rents will ‘turn positive by year-end’ but likely post a 3 per cent decline for the entire year, Morgan Stanley says

Shop rents will ‘turn positive by year-end’ but likely post a 3 per cent decline for the entire year, Morgan Stanley says