The Zhitong Finance App learned that Knight Frank released the latest “Hong Kong Quarterly Market Report”. The report shows that some property markets continue to improve. Among them, the rental market is tight in supply of high-quality office buildings, active residential transactions, and increased tourist consumption, bringing support to the market. The bank expects the housing market to remain stable until the end of the year, and the increase in turnover will still lead the growth of property prices. Property prices are expected to rise 8-10% year-on-year throughout the year.
Hong Kong's Grade A office market continued to stabilize in the third quarter, benefiting from a resurgence in Chinese companies' listing activities in Hong Kong and continued inflows of capital from the Mainland. The occupancy rate for IFC Phase I and Phase II is close to saturation. The performance of Class A office buildings in Central District was particularly strong, with rents rising 27.7% year over year in September, while the vacancy rate fell sharply from 14.5% at the beginning of this year to 6.9% at the end of September.
The supply of new office buildings will be limited in the next 4 years, and rents are expected to continue to rise, prompting tenants to deploy earlier and begin planning to renew or relocate 12-18 months before the lease expires.
As the available office space for rent in Central becomes increasingly tight, companies are also gradually considering other commercial areas. The vacancy rate in Admiralty is currently as low as 4%. Knight Frank expects demand to extend to West Kowloon and Causeway Bay, with additional supply in both districts in the future; Quarry Bay is also expected to benefit, as its office rents are relatively attractive and the vacancy rate is high.
In the Kowloon district, about 90% of the top ten office leasing transactions based on floor area involved relocation cases, a significant increase from about 55% in the previous month. The average transaction area increased to about 5,400 square feet in the third quarter, surpassing about 4,000 square feet in the first half of 2026. Tenants seize the current market opportunity and expand, upgrade and redeploy office space to meet business needs before rent increases.
Crystal Tower in Kwun Tong was completed during the quarter, bringing an additional supply of Grade A office buildings to the market. The new floor space is expected to continue to weigh on the vacancy rate in Kowloon East as the tenancy situation of major tenants has yet to be implemented.
Residential property market, Knight Frank said that the Hong Kong housing market has continued to recover since bottoming out in April 2025, and property prices have rebounded 12% from a low level. However, as interest rate expectations have changed, buyers' attitudes have become cautious, and the wait-and-see atmosphere has increased. Currently, actual mortgage costs have not risen significantly, and developers continue to provide attractive mortgage offers to support primary market demand.
Quality, location, and pricing are still the main differentiating factors in the market. The bank expects the housing market to remain stable until the end of the year, and the increase in transaction volume will still lead the increase in property prices. Property prices are expected to rise by 8-10% year-on-year for the whole year, with first-hand transactions reaching about 20,000. The overall monthly residential transaction volume is expected to remain around 1,500 in the next few months.
The residential rental market remains strong, and demand continues to exceed market supply. Limited availability has led to an increase in rents, and the situation in the luxury housing market is particularly evident; rental demand for expatriates, employees of multinational enterprises, and mainland households has also remained active.
Family tenants continue to prefer larger homes and value the proximity to reputable local and international schools. Many mainland tenants choose to rent a property when they first arrive in Hong Kong, and then consider buying a home in the future after familiarizing themselves with the market.
Luxury homes with monthly rent between HK$120,000 and HK$150,000 continue to be sought after by the market. Demand for residential leasing also comes from local tech experts, including some who have benefited from increased liquidity brought about by IPO activities.
Knight Frank said that in the first three quarters of 2026, the momentum of the commercial real estate investment market in Hong Kong continued to increase. Office buildings are the most profitable sector, accounting for 53% of total turnover; the hotel market is the strongest growing asset class.
Hotel turnover since the beginning of the year reached HK$11.3 billion, nearly double the full year of 2025 of HK$6.3 billion, showing the most significant growth in all real estate asset classes.
Private capital continues to be an important driving force in the market. Family offices and ultra-high net worth investors account for 16% of total property turnover since 2026, while the hotel and student dormitory market accounts for 24%. By the end of 2025, there were 3,384 single-family offices in Hong Kong, and the government is actively promoting the further settlement of family offices in Hong Kong. At the same time, the government is promoting construction as an international gold trading center in all aspects, and it is expected that Hong Kong's private capital will continue to provide an important impetus for the real estate investment market.