In short
Podcast Notes: Thoughts on the Market
Episode Title
A Rebound for Hong Kong’s Property Market
Host
Praveen Choudhary, Head of Asian Gaming & Lodging and Hong Kong/India Real Estate Research at Morgan Stanley
Date
January 27th, 2026
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Overview In this episode, Praveen Choudhary discusses the significant rebound occurring in Hong Kong's property market for the first time since 2018, with synchronized growth across major segments: residential, office, and retail. The insights provided are crucial for global investors interested in understanding market dynamics in a globally sensitive real estate environment.
Key Takeaways
Importance of Hong Kong's Real Estate Market
- Global Sensitivity: Hong Kong's property trends mirror and sometimes predict shifts in liquidity, capital flows, and broader macroeconomic sentiments across Asia.
- Current Growth Cycle: For the first time in nearly a decade, all three major segments—residential prices, office rents in Central, and retail sales—are poised for growth.
Factors Driving the Rebound
- Policy Changes:
- Removal of Stamp Duty: In February 2024, Hong Kong abolished extra stamp duties that hindered foreign and mainland Chinese buyers, significantly simplifying the buying and selling process.
- Increased Mainland Buyer Participation: Post-removal, the percentage of units sold to mainland buyers surged to 50%, up from 10-20%.
- Demand Fundamentals:
- Population Growth: Following a decline during COVID, Hong Kong's population rebounded to 7.5 million in early 2025, supported by a talent attraction scheme resulting in 140,000 visa approvals—double pre-COVID levels.
- Household Formation: New household formation rates are exceeding long-term averages, indicating strong demand.
- Affordability:
- Price Correction: Following a 30% decline since 2018, housing prices have reached a long-term affordability average, with the income-to-price ratio now back to 2011 levels.
- Lower Mortgage Rates: As mortgage rates decrease, pent-up demand is likely to resurface.
Economic Indicators
- Wealth Effect: The Hang Seng Index experienced a nearly 30% increase in 2025, historically correlating with increased property purchases.
- Market Optimism: The recovery in residential real estate is beginning to positively affect the office and retail markets in Hong Kong.
Conclusion
- The Hong Kong property market is not merely stabilizing; it is experiencing a marked turnaround. With expected residential price growth of over 10% in 2026, alongside improvements in the office and retail sectors, the episode highlights the strongest signals of recovery seen since 2018.
Call to Action Listeners are encouraged to share the podcast and leave reviews to help spread insights about market trends.
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Disclaimer The information provided in this episode is for informational purposes only and should not be considered as financial advice. It does not take into account personal financial circumstances and objectives.
Written by AI. May contain mistakes. Listen to the episode to check what was said.
Chapters
Tap a time to open that second in VOUnderstanding Hong Kong's Real Estate Market
0:45 to 2:18
Exploration of why investors should pay attention to Hong Kong's property trends.
“That synchronized upturn hasn't happened in almost a decade.”
Drivers of Market Recovery
2:18 to 4:25
Discussion of the key factors driving the recovery in Hong Kong's real estate market.
“when China's residential outlook is negative.”
Transcript
Automatic transcript. May contain errors.0:00Welcome to Thoughts on the Market. I'm Praveen Choudhary, Morgan Stanley, Head of Asian Gaming and Lodging and Hong Kong, India Real Estate Research. Today, I'll look at the market that global investors often watch but may not fully appreciate, Hong Kong real estate. It's Tuesday, January 27th at 2 p.m. in Hong Kong. Why should investors in New York, London or Singapore care about trends in Hong Kong property? That's easy to answer because Hong Kong remains one of the world's most globally sensitive real estate markets. When cycle turns here, it often reflects and sometimes predicts broader shift in liquidity, capital flows and macro sentiments across Asia.
0:41And right now, for the first time since 2018, all three major Hong Kong property segments, residential prices, office rents in the central district of Hong Kong and retail sales are set to grow together. That synchronized upturn hasn't happened in almost a decade. What's driving this shift? Residential real estate is the engine of this turnaround. Prices have finally bottomed after a 30 % decline since 2018. And 2026 is shaping out to be a strong year. We actually expect home price to grow more than 10 % in 2026 after going up by 5 % in 2025. And we think that it'll grow further in 2027. There are three factors that gives us confidence on this out-of-consensus call.
1:27The first one is policy. Back in February 2024, Hong Kong scrapped all extra stamp duty that had made it tougher for mainland Chinese or foreign buyers to enter the market. Stamp duty is basically a tax you pay when buying property or even selling property. And it has been a key way for government to control demand and raise revenue. With those extra charges gone, buying and selling real estate in Hong Kong, especially for mainlanders, is a lot more straightforward and penalty-free. In fact, post the removal of the stamp duty, percentage of units that has been sold to mainlanders have gone to 50 % of total.
2:08Earlier, it used to be only 10 % to 20%. Why is it non-consensus? That's because consensus believes that Hong Kong property price can't go up when China's residential outlook is negative. In mid-2025, consensus thought that the recovery was simply a cyclical response to a sharp drop in the Hong Kong Interbank Offered Rate, or high bar. But we believe the drivers are supply-demand mismatch, positive carry as rental go up but rates go down, and Hong Kong as a place for global monetary interconnection between China and the world that's still thriving. Second, demand fundamentals are strengthening.
2:50Hong Kong population turned positive again, rising to 7.5 million in the first half of 2025. During COVID, we had a population decline. Now, talent attraction scheme is driving around 140 ,000 visa approvals in 2025, which is double of what it used to be pre-COVID level. New household formation is tracking above the long-term average, and mainland buyers are now a powerful force. The third factor is affordability. So after years of decline, the housing prices have come to a point where affordability is back to long-term average. In fact, the income versus the price is now back to 2011 level. You combine this with lower mortgage rate as the Fed cut moves through and you have pent-up demand finally returning.
3:41And don't forget the wealth effect. Hang Seng Index climbed almost 30 % in 2025. That kind of equity rebound historically spills over into property buying. As the recovery in residential real estate picks up speed, we are also seeing a fresh wave of optimism and actions across Hong Kong office and retail markets. So big picture, Hong Kong property market isn't just stabilizing, it's turning. A 10 % or more residential price rebound, a central office market finding its footing, and an improved retail environment all in the same year marks the clearest green lights this market has seen since 2018.
4:23Thanks for listening. If you enjoyed the show, please leave us a review wherever you listen and share thoughts on the market with a friend or colleague today.
4:33Praveen Choudhary:The preceding content is informational only and based on information available when created. It is not an offer or solicitation, nor is it tax or legal advice. It does not consider your financial circumstances and objectives and may not be suitable for you.
From the publisher
Our Head of Asian Gaming & Lodging and Hong Kong/India Real Estate Research Praveen Choudhary discusses the first synchronized growth cycle for Hong Kong’s major real estate segments in almost a decade.
Read more insights from Morgan Stanley.
----- Transcript -----
Welcome to Thoughts on the Market. I’m Praveen Choudhary, Morgan Stanley’s Head of Asian Gaming & Lodging and Hong Kong/India Real Estate Research.
Today – a look at a market that global investors often watch but may not fully appreciate: Hong Kong real estate.
It’s Tuesday, January 27th, at 2pm in Hong Kong.
Why should investors in New York, London, or Singapore care about trends in Hong Kong property? That’s easy to answer. Because Hong Kong remains one of the world’s most globally sensitive real estate markets. When [the] cycle turns here, it often reflects – and sometimes predicts – broader shift in liquidity, capital flows, and macro sentiment across Asia.
And right now, for the first time since 2018, all three major Hong Kong property segments – residential prices, office rents in the Central district of Hong Kong, and retail sales – are set to grow together. That synchronized upturn hasn’t happened in almost a decade.
What’s driving this shift?
Residential real estate is the engine of this turnaround. Prices have finally bottomed after a 30 percent decline since 2018, and 2026 is shaping out to be a strong year. We actually expect home prices to grow more than 10 percent in 2026, after going up by 5 percent in 2025. And we think that it will grow further in 2027. There are three factors that give us confidence on this out-of-consensus call.
The first one is policy. Back in February 2024, Hong Kong scrapped all extra stamp duty that had made it tougher for mainland Chinese or foreign buyers to enter the market. Stamp duty is basically a tax you pay when buying property, or even selling property; and it has been a key way for [the] government to control demand and raise revenue. With those extra charges gone, buying and selling real estate in Hong Kong, especially for mainlanders, is a lot more straightforward and penalty-free. In fact, post the removal of the stamp duty, [the] percentage of units that has been sold to mainlanders have gone to 50 percent of total; earlier it used to be 10-20 percent.
Why is it non-consensus? That is because consensus believes that Hong Kong property price can’t go up when China residential outlook is negative. In mid-2025, consensus thought that the recovery was simply a cyclical response to a sharp drop in the Hong Kong Interbank Offered Rate, or HIBOR.
But we believe the drivers are supply/demand mismatch, positive carry as rental go up but rates go down, and Hong Kong as a place for global monetary interconnection between China and the world that’s still thriving.
Second, demand fundamentals are strengthening. Hong Kong’s population turned positive again, rising to 7.5 million in the first half of 2025. During COVID we had a population decline. Now, talent attraction scheme is driving around 140,000 visa approvals in 2025, which is double what it used to be pre-COVID level. New household formation is tracking above the long‑term average, and mainland buyers are now a powerful force.
The third factor is affordability. So, after years of declines, the housing prices have come to a point where affordability is back to a long‑term average. In fact, the income versus the price is now back to 2011 level. You combine this with lower mortgage rates as the Fed cut moves through, and you have pent‑up demand finally returning.
And don’t forget the wealth effect: Hang Seng Index climbed almost 30 percent in 2025. That kind of equity rebound historically spills over into property buying. As the recovery in residential real estate picks up speed, we're also seeing a fresh wave of optimism and actions across Hong Kong office and retail markets.
So big picture: Hong Kong property market isn't just stabilizing. It’s turning. A 10 percent or more residential price rebound, a Central office market finding its footing, and an improved retail environment – all in the same year – marks the clearest green lights this market has seen since 2018.
Thanks for listening. If you enjoy the show, please leave us a review wherever you listen and share Thoughts on the Market with a friend or colleague today.