After a six-year adjustment period since late 2019, Hong Kong's property market is finally showing signs of a turnaround, with prime office rents and residential prices rebounding significantly in Q4 2025. Jones Lang LaSalle (JLL) forecasts a 0% to 5% increase in Grade A office rents in Central and small-to-medium residential prices by 2026.
The report highlights that the market has long faced high inventory challenges. Based on 2023 and 2024 supply levels, it would take approximately 101.6 and 67.4 months, respectively, to absorb the existing stock. However, as unsold units gradually clear, the inventory absorption period is expected to decline to around 51.3 months by the end of 2025—close to the 2015–2021 average. By late 2026, private residential supply is projected to normalize, with absorption time further shortening to about 44.7 months.
Joseph Tsang, Chairman of JLL Hong Kong, noted that property prices have bottomed out this year, expressing cautious optimism for 2026. Small-to-medium residential prices are anticipated to rise by around 5%, while luxury home prices will remain stable, with rents likely increasing 0%–5%. Newly launched and younger properties are expected to see more pronounced price gains.
Recent cuts in prime lending rates and expectations of further rate reductions are easing mortgage burdens, while pent-up housing demand is gradually being released, supporting sustained transaction growth. However, Tsang warned that macroeconomic uncertainties, a sluggish commercial property market, and rising unemployment could pose challenges next year.
JLL also predicts that Hong Kong’s Grade A office leasing market, after six years of decline since mid-2019, will bottom out in 2026. Central and Tsim Sha Tsui led the recovery, with rents rising 0.5% and 0.2%, respectively, in H2 2025. Net absorption reached 1.63 million sq ft in H2—the highest since H1 2019—indicating firms are resuming expansion plans rather than just consolidating space.
The rebound is driven by strong demand from hedge funds, private banks, and wealth management firms, with record-high numbers of banking licenses and SFC-licensed professionals. Nelson Kwok, Head of Office Leasing at JLL Hong Kong, expects a fragmented recovery in 2026, with financial services firms—particularly in Central—leading the rebound. Central rents may rise 0%–5%, while overall office rents could dip 0%–5%, with vacancy rates staying near 15%.
Retail rents remained under pressure in 2025, with prime malls seeing the steepest declines (9.1%) and high street shops in core areas dropping 7.7%. Lower rents are prompting tenants to upgrade to prime locations and attracting new brands to enter Hong Kong. Leasing activity rebounded but remained concentrated in core shopping districts like Causeway Bay and Central.
Annie Chan, Senior Director of Retail at JLL Hong Kong, expects leasing demand to stay active in 2026, supported by further rental adjustments. However, weak employment prospects and imbalanced tourism may keep vacancy rates elevated, with high street shop rents falling 0%–5% and prime mall rents declining 5%–10% next year.
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