Home sales hit highest quarterly level since 2021

Residential prices to rise by close to 10% this year, whilst Grade A office rents are forecast to grow 4% to 6%.

The property market strengthened in the second quarter of 2026 as residential sales and prices rose, core office rents recovered, retail activity improved, and commercial real estate investment momentum continued, according to Cushman & Wakefield.

Residential transactions reached more than 22,150 units in Q2, up 19% QoQ and 32% YoY, marking the highest quarterly level since Q2 2021. This brought total residential transactions in the first half to more than 40,800 units, the strongest first-half performance since 2021.

Home prices also continued to recover. Official data showed the overall residential price index rose 2.5% in April and May, bringing the year-to-date increase to 7.4%. Cushman & Wakefield’s mid- and small-sized unit price index recorded a 4% q-o-q rise and a 9% increase in the first half.

The firm expects full-year residential transactions to reach about 75,000 units, whilst home prices are projected to rise by close to 10% in 2026. Rental growth is expected to remain moderate, within 5% YoY.

The Grade A office market also improved, with citywide net absorption reaching 396,100 sq ft in Q2. New leased area totalled 1.2 million sq ft, driven mainly by banking and finance and insurance tenants.

Core locations led the rental recovery. Greater Central rents rose 4.1% QoQ in Q2 and 9.7% in the first half, whilst citywide Grade A office rents grew 1.9% QoQ and 4.3% in 1H 2026. Cushman & Wakefield raised its full-year citywide Grade A office rental forecast to 4% to 6%, from its previous estimate of 1% to 3%.

Retail sales also continued to recover, supported by higher inbound visitors and a stronger RMB. Total retail sales reached $171.5b from January to May, up 10.6% YoY, marking 13 consecutive months of annual growth as of May.

High street retail performance was stronger on Hong Kong Island. Causeway Bay and Central both recorded 0% vacancy in Q2, whilst rents rose 1.0% QoQ and 0.8% QoQ, respectively. By comparison, Tsim Sha Tsui rents fell 1.1% QoQ.

In capital markets, large non-residential investment deals exceeding $100m reached $23.2b in the first half, up 84% YoY across 50 transactions. Office assets accounted for 54% of total investment consideration, followed by hotel and rental housing assets at about 23%.

Local buyers remained the main source of capital, accounting for more than 70% of investment consideration. Foreign capital made up 19%, drawn by discounted property prices and conversion opportunities.

Cushman & Wakefield expects full-year commercial real estate investment volume to exceed $40b, with end-users, living sector assets, and private residential sites likely to drive activity in the second half