(Hong Kong, 4th) BOCOM International released its latest report, stating that with interest rates falling and the rebound of Hong Kong's population, these factors are helping to restore market confidence in the real estate sector and expect property prices to rise by 3% in the second half of this year.
BOCOM International noted in the report that although macro uncertainties will continue to affect the Hong Kong real estate market this year, some more critical factors are turning around, which could help stabilize the Hong Kong real estate market, especially the residential market. These include the population rebound and the recent significant decline in interest rates, with lower interbank rates helping to restore market confidence in real estate. They anticipate residential property prices will rise by 3%, 5%, and 5% in the second half of this year, 2026, and 2027 respectively.
The bank also stated that whether it is the return of Hong Kong residents or the government launching talent recruitment programs, the influx of population will increase housing demand and drive short-term rental growth. They expect rents to generally rise by about 2% to 3% this year. Given the preferences of new arrivals to Hong Kong, rental performance in areas close to major business districts and key university areas are expected to be more outstanding, with annual rents in these areas expected to rise by more than 5%.
The bank pointed out that although local and visitor consumption habits have changed, the retail market still faces certain challenges. However, the trend of consumer travel north is gradually stabilizing, partially alleviating pressure on local retailers, resulting in overall more moderate rental pressure.
The bank also noted that it remains cautious about the office market. Although vacancy rates have decreased, they remain high, and many large projects are due to be completed this year and next, limiting the rebound space in the office market. They expect that until there is a change in rental expectations or a significant improvement in the economic outlook, rents for Grade A office spaces in major central business districts are expected to fall by about 3% to 5% year-on-year this year.
BOCOM International noted in the report that although macro uncertainties will continue to affect the Hong Kong real estate market this year, some more critical factors are turning around, which could help stabilize the Hong Kong real estate market, especially the residential market. These include the population rebound and the recent significant decline in interest rates, with lower interbank rates helping to restore market confidence in real estate. They anticipate residential property prices will rise by 3%, 5%, and 5% in the second half of this year, 2026, and 2027 respectively.
The bank also stated that whether it is the return of Hong Kong residents or the government launching talent recruitment programs, the influx of population will increase housing demand and drive short-term rental growth. They expect rents to generally rise by about 2% to 3% this year. Given the preferences of new arrivals to Hong Kong, rental performance in areas close to major business districts and key university areas are expected to be more outstanding, with annual rents in these areas expected to rise by more than 5%.
The bank pointed out that although local and visitor consumption habits have changed, the retail market still faces certain challenges. However, the trend of consumer travel north is gradually stabilizing, partially alleviating pressure on local retailers, resulting in overall more moderate rental pressure.
The bank also noted that it remains cautious about the office market. Although vacancy rates have decreased, they remain high, and many large projects are due to be completed this year and next, limiting the rebound space in the office market. They expect that until there is a change in rental expectations or a significant improvement in the economic outlook, rents for Grade A office spaces in major central business districts are expected to fall by about 3% to 5% year-on-year this year.