American Connection: Economic improvement leads to a thriving buy-to-rent market in Hong Kong, with residential registration reaching a 15-year high.

The basic economic fundamentals of Hong Kong have improved, driving the robust trading in the Hong Kong property market and demonstrating strong recovery momentum. Matther Ma, CEO of Midland Holding and Midland Business Premises, as well as Executive Director of Midland Property, pointed out that July 1 marks the beginning of the second half of the year, and also the anniversary of Hong Kong's return. In the 29th year of return, both residential registration and overall property registration have reached multi-year highs, showcasing the stable and positive direction of the Hong Kong property market. At the same time, the rental market continues to be hot, with rents breaking records for 5 consecutive months. With the traditional peak rental season approaching, the continuous improvement in the economy, and the increase in household income for private housing, it is expected that rents will continue to rise in the coming months, providing a strong foundation for market development, and we believe that the Hong Kong property market will continue on its healthy path of "strong trading and renting". In terms of business premises, Ma predicts that the overall business premises market in Hong Kong will continue to warm up in the second half of the year, with an expected registration volume of about 2,500 cases, an increase of about 10% compared to the same period last year, and trading in the three major sectors is expected to maintain a similar level to the first half of the year. In the 29th year of return, trading in residential and overall property registration reached new highs in many years Due to the dual driving force of rising property prices and steady economic recovery in Hong Kong, the property market in Hong Kong has shown strong momentum in the 29th year of return. According to data from the Land Registry compiled by Midland Property's research center, for the 29th year of return (up to June 16 of this year), excluding first-hand public housing, the number of first and second-hand residential registrations in Hong Kong reached about 76,263 cases, a 15-year high. In addition to the stellar performance of the residential sector, the overall property market in Hong Kong has also experienced a comprehensive rebound. Covering registrations of first-hand private buildings, second-hand residential properties, first-hand public housing, business premises, pure parking spaces, and other property categories, the total registration in the 29th year of return is about 90,063 cases, with an expected challenge to reach 93,000 cases, which would set a 13-year record. With trading volume widely and comprehensively rising, it fully demonstrates the overall release of market purchasing power, and the atmosphere of the property market in Hong Kong is significantly vibrant. While the trading market is active, the rental market is also performing well. According to the Midland Rental Trends Chart, the average monthly rent for private residential properties based on usable area rose to around HK$39.55 in May, breaking records for 5 consecutive months, compared to the near-year low of around HK$33.51 in January 2023, an increase of about 18%. Rental demand is strong, and the strong upward trend in rents is not limited to specific areas. Major indicator estates across Hong Kong have also seen widespread increases. Compared to the low in January 2023, the latest average rent for the top ten estates has recorded double-digit significant increases. Among them, Taikoo Shing, South Horizons, and Whampoa Garden saw the most significant increases, all rising by about 30%; while Kornhill Gardens and Newport City also recorded increases of 29.3% and 28%, respectively. As rent rises, the proportion of properties with higher rental values being transacted has increased. Based on the residential rental cases concluded by the group, the proportion of residential rental transactions with monthly rents exceeding HK$30,000 has increased from about 15% in 2024 to around 20% in the first five months of 2026. The core driving force behind the increase in trading in the Hong Kong residential and rental markets lies in the continuous improvement of economic data in Hong Kong and the increase in household income for private housing. According to the Hong Kong Census and Statistics Department's Quarterly Report on Comprehensive Household Survey, the median household income for private housing in Hong Kong reached HK$44,000 in the first quarter of 2026, surpassing the HK$42,000 in the same period in 2025, setting a new historical record and providing strong support for the rental and buying markets. The rental burden ratio remains at a healthy level, while rental yields remain attractive Despite rents hitting record highs in recent months, the simultaneous growth in household income for private housing has kept the rental burden of residents at a relatively healthy level. Data shows that with an area of 500 square feet, the average rent for private residential properties in Hong Kong was around HK$39.55 per square foot in May, resulting in a rental burden ratio of about 44.9% in May, which is similar to the long-term average of about 44.2% from 1997 to 2025. This means that the current rise in rents is based on the improvement in the real economic capacity of Hong Kong residents, and the increase in income helps alleviate the pressure of rising rents, making the rental market development more stable. For investors, rental yield is an important consideration for market entry. Although property prices in Hong Kong have risen more than rents in recent months, causing the rental yield to drop slightly from its peak, it is still significantly better than the low rental yields in 2021. According to data from the Rating and Valuation Department of Hong Kong, the rental yields for various types of private residential properties in April are much higher than in 2021, and have been maintained at a relatively high level in recent years. For Class A units with an area of around 430 square feet or less, the rental yield is 3.5%; and for Class B units with an area of 431 to 752 square feet, the yield is 2.9%, which is expected to continue to attract long-term investors for property purchase and rental. With the traditional peak rental season approaching, an increasing number of overseas students, Mainland students, and other newcomers to Hong Kong due to various talent importation programs are expected to further drive up rental trading. Ma estimates that with strong demand and support from increasing household income for private housing, rents are expected to rise by about 1.5% in the second quarter and an additional 2% in the third quarter. It is expected that the registration volume of commercial premises in Hong Kong in the second half of the year will reach about 2,500 cases, an increase of about 10% compared to the same period last year As for the forecast for commercial premises, Ma expects that the registration volume of commercial premises in Hong Kong will be around 2,550 cases in the first half of this year, an increase of about 10% compared to the same period last year; while the registration amount is about HK$26.5 billion, a decrease of about 10% compared to the same period last year. The increase in registration volume and decrease in amount not only reflect the adjustment period for overall commercial property prices but also indicate that transactions within the period are mostly focused on mid-to-low-priced properties. Looking ahead to the second half of the year, the total registration volume of commercial premises in Hong Kong is expected to reach about 2,500 cases, an increase of about 10% compared to the same period last year, and trading in the three major sectors is expected to maintain a similar level to the first half of the year. For industrial buildings, with developers continuing to launch new inventory, coupled with the gradual return of market funds, both the first and second-hand markets are expected to benefit, and trading performance is expected to continue to improve. It is expected that the trading volume of industrial buildings in Hong Kong in the second half of this year will increase by about 20% year-on-year, reaching about 1,250 cases. As for office buildings, due to the high base number last year, it is expected that the trading volume in the second half of this year will remain largely unchanged, at around 600 cases. However, it is worth noting that commercial building prices have been continuously low in recent years, and with the Hong Kong government's launch of the "Urban School Hostel" program last year, attracting some buyers to invest or use properties at a low price, significant transactions are expected to continue to focus on the commercial building market. For retail properties, although the growth in transactions lagged behind last year, as the local economy in Hong Kong gradually improves and the consumer trend of Mainland visitors eases, the retail, tourism, and restaurant industries are showing signs of stabilization, and funds are expected to flow back into the market. It is expected that the retail sector in Hong Kong will "catch up" this year, with transaction volume reaching about 650 cases in the second half of the year, an increase of about 10% compared to the previous year.