Hong Kong home rents rise through mid-2025

A flats recorded a yield of 3.7%, compared to 2.4% for the largest Class E flats.

Rents for private homes in Hong Kong continued to rise through mid-2025, even as prices remained flat.

According to the Hong Kong Property Review – Monthly Supplement released by the Rating and Valuation Department, the private residential rental index climbed to 195.6 in June, whilst the price index held steady at 286.7.

The upward pressure on rents was seen across all unit sizes and districts, and yields improved slightly—particularly for smaller units, where Class A flats recorded a yield of 3.7%, compared to 2.4% for the largest Class E flats. However, popular developments in the New Territories continued to reflect price softness.

In contrast, the private office sector remains under pressure. The office rental index dropped from 227.7 in 2023 to 212.2 in June 2025, whilst the price index fell even more sharply, from 468.7 to 311.3 over the same period.

Despite the decline, yields have improved marginally, reaching 3.6% for Grade A offices and 4.1% for Grade B stock. The retail sector also experienced modest declines, with the rental index at 157.3 and the price index at 365.8. Yields in this sector increased to 3.4%, as prices softened more than rents.

The industrial sector, particularly private flatted factories, saw flat rental performance but continued price declines.

The rental index held at 211.1 in June, whilst the price index fell to 636.9. This resulted in a yield increase to 4.0%, making it the highest among the major property sectors and a relative bright spot for investors seeking higher returns.

Supply data for the first half of 2025 showed 10,063 private residential units completed, representing 48% of the year's projected total of 20,862 units. Kowloon accounted for the bulk of completions, with 7,258 units delivered.

On the non-residential side, completions included 41,600 square metres of office space (just 13% of the annual forecast), 30,400 square metres of flatted factory space (60%), and 8,500 square metres of specialised factories (24%).

Residential sales remained active despite the flat price trend. In 2024, 53,099 residential transactions were recorded, totaling $454.4b.

Commenting on the latest figures, CBRE said the data suggest Hong Kong's residential property market may be nearing the bottom of a correction that began in 2021. Eddie Kwok, Executive Director of Valuation & Advisory Services at CBRE Hong Kong, noted signs of a turnaround, citing a government land tender in Tuen Mun that was awarded at a higher-than-expected price.

According to Kwok, this outcome reflects growing confidence among developers about future price recovery. He also pointed to the return of compulsory sales for redevelopment projects, which had been dormant for some time, as further evidence that market sentiment is improving.

Kwok highlighted that despite lingering inventory, developers have managed to maintain consistent sales of over 1,600 primary units per month since February. This steady absorption has begun to reduce inventory pressure, decreasing the urgency for further price cuts.

Looking ahead, CBRE expects discounts to become less frequent. Kwok said the combination of improving sentiment and expectations for a US Federal Reserve rate cut could mark a turning point:

“We are optimistic that we are proceeding to a bottom out,” he said, adding that this may finally signal the end of the housing market downturn that began four years ago.