Jones Lang LaSalle: Hong Kong's property market is finally turning bright, and property prices are expected to rise by as much as 5% next year

The Zhitong Finance App learned that JLL published a report saying that after a six-year adjustment period starting at the end of 2019, the Hong Kong property market finally saw a bright turn, and high-quality office rents and residential property prices picked up significantly in the fourth quarter of 2025. JLL anticipates that Class A office rents and small to medium residential prices in Central will record a 0% to 5% increase in 2026.

The report points out that in recent years, the market has been facing the challenge of high inventories. Based on the supply in 2023 and 2024, it will take the market about 101.6 months and 67.4 months, respectively, to absorb all inventory. With the gradual digestion of end-of-goods units, it is expected that by the end of 2025, the inventory digestion period will fall back to the average level of about 51.3 months from 2015 to 2021. Meanwhile, private housing supply is expected to return to normal levels by the end of 2026, and the delivery rate can be further shortened to about 44.7 months at that time.

Chairman Zeng Huanping of JLL Hong Kong said that Hong Kong property prices have bottomed out this year, and he is cautiously optimistic about the 2026 outlook. Small and medium-sized housing prices are expected to rise by about 5%; luxury home prices will remain stable, but rents are expected to rise 0% to 5%.

He pointed out that property prices for new developments and younger housing estates will increase significantly. New sales are expected to continue to flourish, which will help drive the overall market atmosphere and push Hong Kong property prices to continue to rise. The bank's recent reduction in the best interest rate and the market's expectations for subsequent interest rate cuts will help to further ease the mortgage burden, while demand for housing, which has been suppressed for a long time, will gradually be released, and turnover is expected to continue to grow. However, he also cautioned that macroeconomic uncertainties still exist, as well as the continued downturn in the commercial real estate market and a recovery in unemployment, which may present challenges for the housing market next year.

According to JLL, Hong Kong's Grade A office leasing market is expected to bottom out in 2026 after six years of recovery from the second half of 2019. Central and Tsim Sha Tsui led the recovery, with rent increases of 0.5% and 0.2% respectively in the second half of the year. Net absorption in the second half of this year reached 1.63 million square feet, the highest level since the first half of 2019, reflecting that the company is no longer focusing only on integrating space, but has begun restarting expansion plans. The market recovery was mainly driven by strong demand from hedge funds, private banks and wealth management centers, while the number of bank deposits and SFC licensed professionals reached record highs during the year.

Guo Liyan, head of the Hong Kong Island Commerce Department at JLL, said that looking ahead to 2026, market performance is expected to show a pattern of differentiation, which can be described as responding to the statement that “office buildings are no longer a single market, but a combination of multiple market segments.” The recovery will continue to be driven mainly by financial services institutions, with the central office market benefiting the most.

JLL expects central rents to rise by 0% to 5%, while overall market rents may fall by a further 0% to 5%. As supply continues to be huge, the overall vacancy rate is expected to remain around 15% even if demand picks up. As rent declines slow, the market appears to be at or close to bottoming out, making it a good time for tenants to lock in long-term leases.

JLL pointed out that retail rents continued to be pressured this year, with high quality shopping malls performing the weakest, and the vacancy rate is still high. In 2025, rents for high quality shopping malls and street shops in core areas decreased by 9.1% and 7.7% respectively, but the vacancy rate of street shops in core areas improved slightly. The fall in rents prompted tenants to take advantage of the opportunity to upgrade to core locations, while attracting new brands to seize lower rent levels to enter the Hong Kong market. Overall leasing activity has picked up, but transactions are still concentrated in core shopping areas such as Causeway Bay and Central.

Chen Yonghui, senior director of JLL's Hong Kong store department, said that although some established restaurants have closed their businesses one after another, demand for upgrades and new brands is still steady. It is expected that the rental market will remain active next year, supported by further rent pullbacks. Considering weak employment prospects and continued imbalances in inbound and outbound tourism, it is expected that in 2026, stores will close faster than new leases will be accepted, and the vacancy rate will remain high.

Chan Wing-wai predicts that street rents in Hong Kong's core area will drop by 0% to 5% next year, while rents in high-quality shopping malls may drop further by 5% to 10%.