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Current Affairs

Why Hong Kong property recovery sceptics miss the bigger picture

Hong Kong’s real estate market has come a long way in the past year. For a sign of the extent to which its outlook has…

By Samantha Johnson / April 20, 2026
Hong Kong’s real estate market has come a long way in the past year. For a sign of the extent to which its outlook has improved, look no further than the rapid shift in expectations for the growth in house prices this year.

As recently as January, Morgan Stanley characterised its prediction of a 10 per cent rise in secondary home values as a non-consensus call. Fast forward to today, and its forecast is in line with those of most other industry experts.

The outlook for the city’s office market has also brightened. While there are sharp divergences between submarkets, rental growth is picking up. Grade A offices in three of the five districts tracked by CBRE experienced rental growth on a quarterly basis last quarter.

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However, scepticism over the strength and breadth of the recovery abounds. This is partly because of years of false dawns and of dramatic deterioration in the geopolitical environment, which poses a threat to financial markets. Moreover, acute supply and demand imbalances continue to weigh on leasing and investment activity.

In the residential sector, excess inventory stood at 17,500 units last month, according to data from Midland Realty. While this is down sharply from 23,000 at the beginning of last year, it shows there is still a large amount of unsold stock waiting to be absorbed. Furthermore, new completions are expected to reach almost 17,000 units this year, much lower than the 24,300 in 2024, but a sign that supply pressures have not dissipated.

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Although large and well-capitalised developers have begun to cut discounts and are cautiously raising prices at some newly launched projects, Knight Frank said home builders are still “actively clearing stock and are expected to introduce more incentives and flexible financing schemes to attract buyers”. This is moderating the pace of price gains.

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