- Residential Market: Q2 residential transaction numbers increased by 19% q-o-q and 32% y-o-y to reach more than 22,150 units. Home prices rose by 2.5% during April and May, bringing a cumulative 7.4% increase for the first five months, with growth recorded across different segments.
- Grade A Office Market: Citywide net absorption reached 396,100 sq ft in Q2, with new leases mainly driven by the banking & finance and insurance sectors. Core areas such as Greater Central witnessed significant rental pick up, offsetting rental corrections in non-core submarkets. Cushman & Wakefield expects the overall office market rental level to rise by +4% to +6% in 2026.
- Retail Market: Overall retail sales maintained steady growth on the back of sustained rises in inbound visitors and a stronger RMB. High street vacancy rates in Causeway Bay and Central remained at 0% in Q2, with Hong Kong Island leading a rental growth recovery.
- Capital Market: Hong Kong’s commercial real estate investment market sustained the momentum carried over from late 2025. Supported by demand from end-users and still-attractive pricing levels across property sectors, total large-sized (>HK$100 million) non-residential transaction volume for the 1H 2026 period recorded HK$23.2 billion, up 84% y-o-y.
Residential market activity remained robust as transaction numbers surpassed 22,000 cases in Q2, the highest quarterly record since Q2 2021. Grade A office market net absorption reached 396,100 sq ft in Q2, with rental level recovery mainly driven by core areas. Greater Central rents continued to pick up by 4.1% q-o-q in Q2, supporting the citywide rental level to grow by 1.9% q-o-q. In the retail sector, total retail sales continued to recover steadily, while high street store vacancy in Causeway Bay and Central returned to 0%, supporting stronger rental performance on Hong Kong Island and outpacing Kowloon. In the capital markets, end-users and well-capitalized investors bottom-fished amid attractive office asset pricing. Living sector and residential site transactions are expected to be the market focus in the upcoming months.
Office Market Key Takeaways
- Driven by take-up at recent new entrants into the market, citywide net absorption reached 396,100 sq ft in Q2, primarily led by Greater Central and Greater Tsimshatsui.
- The overall office rental level moved up by 1.9% q-o-q in Q2, bringing the YTD increase to 4.3%. However, rental level divergence between core districts and non-core areas has widened.
- Leasing demand from the banking & finance sector is expected to remain resilient, with diverse leasing strategies shaped by wealth management expansion, an active IPO pipeline, and long-term operational needs from financial institutions.
- Around 1.4 million sq ft of new supply is expected in 2026, with most commencing in Q4, suggesting availability is likely to remain stable in the coming quarter.
- Further rental upward momentum is expected to moderate in 2H. Full-year rental growth in the Greater Central district is projected at +10% to +12%, helping to support overall Grade A office rental growth of 4% to 6% in 2026.
Retail Market Key Takeaways
- Sustained growth in inbound visitors combined with more resilient local consumption expenditure continued to support retail market recovery in Q2.
- Causeway Bay and Central districts continued to record zero vacancies, while vacancy rates in Kowloon trended slightly upward.
- High availability continued to weigh on F&B rental performance, inducing more landlords to offer attractive packages.
- Cushman & Wakefield forecasts high street retail rents in Causeway Bay and Central to rise by 3% to 5% in 2H 2026, while Tsimshatsui and Mongkok are forecast to pick up by 1% to 2%. F&B rents are expected to record a gentle decline in the 1% to 2% range in 2H 2026.
- International brands are likely to remain the major demand drivers in 2H 2026, with a location preference for Hong Kong Island.
Residential Market Key Takeaways
- Residential market momentum sustained in the period, with demand from incoming talent, Chinese mainland buyers, and rising rental level.
- Home sales continued to pick up, with Q2 2026 residential S&P numbers recording a 32% y-o-y increase.
- According to Cushman & Wakefield data, overall mass market home prices in Q2 increased by approximately 9% for the YTD period.
- The full-year 2026 residential transaction number is now expected to reach around 75,000 units.
- Full-year 2026 home prices are anticipated to rise by close to 10%.
Capital Market Key Takeaways
- Investment momentum continued from the 2H 2025 period, bringing 1H 2026 total investment consideration to record HK$23.2 billion, up 84% y-o-y.
- The living sector continued to be sought after, attracting local, Chinese mainland, and foreign capital.
- End-users continued to bottom-fish to lock in long-term occupancy costs, especially for cash-rich Chinese mainland corporates, education institutions, and financial institutions.
- Rising residential market sales numbers and home prices will likely spur more private residential site transactions in 2H 2026.
- Full-year 2026 investment volume is now forecasted to reach more than HK$40 billion, mainly driven by local capital and end-users.
