HSBC: Hong Kong property prices are expected to rise by 10% this year and are likely to return to their 2021 peak within this cycle.

StanChart's Hong Kong Economic Research Department's Hong Kong real estate analyst Qiu Zhuowen stated that the Hong Kong property market has gradually stabilized since the second half of last year, with residential prices rising by about 10% from their lows, and the office and retail markets have also shown stability. The sales momentum of new developments is strong, with developers shifting from offering discounts last year to raising prices this year. Additionally, with the government withdrawing cooling measures, Mainland, local buyers, and investors have returned, leading to an increase in rental prices due to the inflow of talent, and speculation in the short term has also begun to increase. He pointed out that the inventory of new developments continues to decline, and future new residential supply is expected to significantly decrease due to insufficient land supply in the past few years. It is expected that property prices will rise by 10% this year, with the potential to return to the high levels of 2021 within this cycle, and further increases are still possible. StanChart's Senior Research Analyst in Hong Kong, Liang Ziyin, stated that the Hong Kong retail market performed relatively resiliently in the first quarter of 2026 despite stock market volatility, with strong sales of non-essential goods and home appliances; overall retail sales fell by about 12% in the first three months, but inbound tourist numbers increased by 17%, driving local consumption and dining to gradually stabilize with increasing tourist spending contributions. In addition, with the appreciation of the Renminbi and the promotion of large-scale events, retail sales have rebounded from their lows last year to 83-84% of 2018 levels. At the same time, high-quality large shopping malls have seen an increase in rental income due to improvements in tenant sales, but community-oriented shopping centers are still affected by online shopping competition and operational cost pressures. The retail property investment market has also seen a return of investors, favoring high-quality assets with yields of 5-6%. Looking ahead to 2026, overall retail sales are expected to grow by 5%, and retail rents are expected to increase by 3%.