Home prices hold steady as retail and office sectors soften: report

UOB Kay Hian sees resilience in housing but prolonged weakness in commercial demand.

Hong Kong’s property market has stabilised on steady housing demand, even as retail and office sectors continue to weaken, UOB Kay Hian said in a sector update. 

Home prices are expected to remain flat this year, then rise 2% in 2026 and 3% in 2027, supported by tighter land supply, stronger primary-market sales, and rental yields averaging 3.7%.

Retail sales are projected to contract 2% in 2025, with rents and prices falling 3.5% and 10%, respectively. Tourist spending has dropped to 18% of total sales, down 60% from 2018 levels, whilst local consumption remains pressured by e-commerce growth and northbound travel.

The office market remains oversupplied, with completions expected to reach 116,000 square metres in 2026, exceeding net take-up of less than 100,000 sq. m. Grade A office rents are forecast to fall 2% this year before stabilising next year, whilst prices could drop 12% in 2025 and 8% in 2026, according to the report.

UOB Kay Hian said low-leverage landlords, including Sun Hung Kai Properties and Hysan Development, should stay resilient amidst subdued commercial sentiment as the market seeks equilibrium.