Knight Frank’s latest Hong Kong Monthly Report highlights the varied performance of the property market.
Grade-A Office Market
Hong Kong
Premium Central Grade-A offices continue to attract strong demand, underpinned primarily by financial services as well as ongoing flight-to-quality and expansion needs, which supported roughly 10% rental growth over the past 12 months. Traditional Central benefited from near‑zero vacancy in the Premium Grade segment.
Leasing activity has also picked up in West Kowloon and Quarry Bay, particularly in newer, high‑specification buildings. Multinational occupiers are not only right‑sizing but also upgrading to higher‑quality spaces, reflecting evolving tenant preferences and reinforcing the continued flight‑to‑quality trend across the market.
Kowloon
Leasing activity in April was driven mainly by renewals and lease restructurings, particularly in the IT and electronics sectors. Tenants moved early to lock in favourable rents as the Kowloon office market nears its bottoming phase, with narrowing renewal discounts across all districts signalling improving sentiment. With limited new supply expected in 2026, rental declines are likely to moderate as the market approaches a soft landing.
Residential
Primary residential sales reached 8,146 units between January and April (+47.8% YTD), with total transactions at 26,022 units (+45.5% YTD). Investment demand has strengthened, driven by mainland Chinese buyers targeting university catchment areas and emerging districts. Overall, this broad-based rally is driven by heightened buyer urgency amid shrinking inventory, paired with capital inflows drawn to Hong Kong’s favourable tax policies and free flow of capital.
The leasing market remains active, supported by strong demand from mainland Chinese families and MNC for corporate relocations. Supply remains tight, with activity largely focused on renewals.
Retail
Hong Kong’s retail sales extended their growth streak to an eleventh consecutive month with a 12.8% YoY surge in March, driven by strong demand for motor vehicles and luxury goods.
High-end retailer leasing activity also signals improving market sentiment. The luxury segment, particularly gold-related products, is expected to outperform, supported by sustained local and mainland demand. In contrast, price-sensitive retailers are likely to accelerate their shift online amid rising store costs.
As tourist preferences shift towards cultural experiences, retailers are becoming more selective in expansion, focusing less on broad footprint growth, prioritising on locations that integrate cultural and experiential elements. Prime street retail and shopping malls are expected to outperform.