The Zhitong Finance App learned that Savills released a report saying that the differentiation of the Hong Kong real estate market widened further in the second quarter of 2026: the residential market remained resilient with the support of mainland buyers, while commercial properties continued to be revalued. In the first half of the year, total investment in non-residential properties with a single turnover of over HK$50 million in Hong Kong surged 120% year-on-year to $22.3 billion. Office buildings and hotels accounted for 67.6% and 21.6% of the investment, respectively, as the main transaction sectors. It shows that the market is moving from a slump to a selective recovery, yet buyers still attach great importance to asset quality, prices, financing conditions, and stable cash flow.
Commercial property price adjustments continue. The price of grade A office buildings fell by about 49% from the 2018 high, and the price of core street stores fell by about 65% from the 2013 high; the transaction price of some acquired properties was 35% to 56% lower than the original purchase price or valuation.
Office investment activity showed initial signs of stabilization, with a particular focus on core assets with excellent locations, high quality and long-term private use or investment value. The overall vacancy rate for Grade A offices in the second quarter of 2026 fell 0.4 percentage points quarterly to 14.8%.
Demand in the housing market remains steady. In the first half of 2026, mainland buyers traded about HK$107.1 billion, or about 75% of the full year level of 2025; there were 134 super luxury property transactions over HK$100 million, an increase of 91% over the same period last year, with mainland buyers accounting for 69 transactions.
The fundamentals of the hotel and student housing market are relatively good. As of May 2026, the average hotel room price had recovered to 98% of the 2018 high, with an occupancy rate of 84% in the second quarter; while the number of non-local students in the 2024/25 school year increased 97% from five years ago to about 92,000, and the student dormitory bed gap was about 72,000, supporting related modifications and investment needs.
Mr. Tang Zhuoxuan, Director of Research and Consulting at Savills, said, “There is no shortage of capital in the Hong Kong market. Currently, the key is that buyers are more stringent on price and return requirements. As the supply of non-performing assets increases, it may continue to put price pressure on the market in the short term, but fuller asset revaluation can also help facilitate a new round of transactions. The market is expected to maintain selective recovery in the second half of the year. Capital allocation restrictions brought about by overseas investment regulations, and the takeover of property supply driven by lenders may become two important factors affecting market performance in the second half of 2026. Priority will be given to assets that are reasonably priced, of excellent quality and supported by stable cash flow.”
Mr. Yuan Zhiguang, Managing Director of Savills Investment Department, said, “The non-residential investment market rebounded markedly in the first half of the year, reflecting that users, institutions and foreign capital have begun to seize the opportunities of high-quality asset price adjustments. Among them, office buildings and hotels have received the most attention in the market, while projects related to hotels, serviced residences and student dormitories with potential for renovation also continue to attract long-term capital. However, the market recovery is not comprehensive, and investors will continue to focus on core locations, high-quality properties, and projects with clear room for asset appreciation.”