Home prices may rise up to 5% amid strong first-hand sales demand

Transactions may reach 55,000-58,000 units, driven by first-hand sales contributing 35-40%, the highest level since 2004.

Home prices are expected to rise slightly, driven by increased transactions and strong demand for first-hand sales, Knight Frank said.

In its report, Knight Frank said home prices could increase by up to 5%, with transactions potentially reaching 55,000-58,000 units, driven by first-hand sales contributing 35-40%, the highest level since 2004.

For the office market, the firm said it will encounter a mix of challenges and opportunities in 2025, with rental trends shaped by changes in corporate demand, an increasing supply of office space, and ongoing economic and political uncertainties.

In the capital markets, transactions valued at HKD 100 million or more fell by 58% year-on-year in 2024.

Despite this, Knight Frank highlighted resilience in the office sector, driven by end-user interest in discounted or distressed assets, and expects luxury residential and en-bloc investments in hotels and residential buildings to gain traction.

The firm also reported a 7.1% YoY drop in retail sales, citing demographic shifts and changing consumer behaviors as key factors.

Mainland tourists’ preference for cultural experiences has impacted luxury retail sales, though developments like the Kai Tak Sports Park may encourage local spending through experiential consumption.

For the industrial market, Knight Frank pointed to high vacancy rates, with overall vacancies at 8.2%.

While logistics and general industrial spaces face challenges, the firm expects demand from e-commerce and the electric vehicle sectors to grow in 2025.