2025 Hong Kong Property Market Outlook: Prices Poised for 5%-10% Growth, Rental Demand to Surge on Infrastructure & Talent Policies

Driven by multiple favorable factors—including a strong stock market, sustained declines in mortgage rates, and relaxed talent policies—the Hong Kong property market is gradually entering a recovery phase. Developers such as Far East Consortium (00035) predict that Hong Kong’s property prices will rise by 5% to 10% in 2025, with rents also edging up moderately by 2% to 3%. Key growth drivers will include the development of the Northern Metropolis, new property supply, and the renovation of commercial properties.

Abundant Recovery Momentum: Multiple Catalysts Propel Price & Volume Growth

Kevin Fong, Managing Director of Far East Consortium’s Property Division, noted that positive factors are converging to boost the market:

• The financial market has risen by approximately 30% since the start of the year, with daily turnover reaching HK$270 billion. As a barometer of the economy, the strong stock market has enhanced investor confidence in the property sector.
• Hong Kong banks have cut interest rates five times since last year, totaling a 0.875 percentage point reduction. The effective mortgage rate has fallen to 3.25%, returning to pre-downturn levels.
• The inventory of new residential units has dropped to 19,000, shifting market focus from “pursuing volume” to “valuing price.”

On the talent front, the government’s efforts to attract professionals and overseas students, coupled with the reduced investment immigration threshold (lowered to HK$30 million for property purchases), have directly stimulated both homebuying and rental demand. Most new arrivals opt to rent first before purchasing, driving sustained rent increases this year. Developers are also planning to convert some commercial projects into student dormitories to meet rising demand. Additionally, as a core engine for future development, the Hung Shui Kiu area of the Northern Metropolis will launch its first land tender by the end of the year, with related infrastructure projects expected to lift surrounding property values.

Market data confirms the recovery trend: In November, 9 out of the 10 major housing estates recorded price increases, with Sha Tin City One leading at over 10% month-on-month. For the full year, second-hand property transactions have exceeded 3,000 monthly for 8 consecutive months, while new property registrations have surpassed 1,500 monthly for 9 months. Short-term profit-taking cases are emerging, with properties like Fanling Metro City and Wai Wah Centre appreciating by 11% to 15% within 2 to 5 months of ownership.

AI Empowers Property Development: New Supply Focuses on Mid-Small Units & Luxury Homes

Developers are leveraging new technologies to enhance competitiveness. Chan Fu-keung, General Manager of Sales and Marketing at Far East Consortium, revealed that the group has integrated AI into customer analysis, project layout design, and property management optimization. Combined with Building Information Modeling (BIM) technology, AI helps shorten construction cycles and predict material supply delays. For construction site safety, intelligent monitoring systems assess operational risks to prevent accidents.

In terms of new supply, Far East Consortium will launch two new projects in 2025:

• The Sai Ying Pun Kwai Heung Street project (a collaboration with the Urban Renewal Authority) will offer approximately 200 mid-small units. Located near the MTR Sai Ying Pun Station with excellent school networks and strong rental yields, it targets both investors and homebuyers.
• The Ho Chung, Sai Kung project (a joint venture with Sincere Properties and Lan Kwai Fong Group) will feature 26 detached houses, each over 2,000 sq ft, catering to the high-end market.

Other developers are also active:

• Cheung Kong Holdings (01113) and Sun Hung Kai Properties (00016)’s Tuen Mun Feiyang Phase 1 has released 6 three-bedroom units for tender, with cumulative sales exceeding 90% and proceeds of nearly HK$3.8 billion.
• Wheelock Properties’ KOKO HILLS series has sold 989 units, generating over HK$9.89 billion in revenue.
• The luxury South District development Kai Yue has recorded two transactions totaling over HK$150 million, reflecting robust demand for high-end properties.

Commercial Property Polarization: Office Upgrades & Vibrant Community Shop Rentals

The commercial property market shows a polarized trend—”strong in core areas, weak in non-core districts”:

• Offices: Central’s Grade A office rents have bottomed out and rebounded, with super Grade A rents reaching HK$102 per sq ft in October (up 0.7% month-on-month). International law firm Harneys and a Chinese-funded institution have upgraded to larger spaces in Central. In East Kowloon, despite a 19.4% vacancy rate, brands like Anta Sports and JCPenney have expanded their leases, signaling a potential rent floor.
• Shops: Rental rates are stabilizing, particularly in community areas. A fresh food store in Tseung Kwan O’s Fuk Hong Garden secured a lease at HK$309 per sq ft, while market-related shops in Sham Shui Po and To Kwa Wan rented for HK$50-52 per sq ft. Grab-and-go pastry shops are thriving near transport hubs—Mr. Bun secured a Central shop at HK$186 per sq ft, with rent down 31% from the previous term, reflecting rationalization in core district rents.

Property investment is seeing a trend toward commercial renovation:

• A full-building commercial property on Wellington Street, Central, is for sale at HK$70 million, with redevelopment potential of 12,180 sq ft.
• The Yummy Hotel in Kwai Chung (owned by the Tang Shing-bor family) was sold to China Resources Land for HK$950 million, to be converted into student dormitories.
• The top-floor unit of Bank of America Tower in Central fetched HK$200 million, doubling the owner’s initial investment.

Relaxed Mortgage Policies & Northern Metropolis Drive Rental Demand

While November’s existing-property mortgage registrations fell 26.6% month-on-month (due to a drop in subsidized housing transactions), full-year registrations are expected to grow strongly. The government and HKMA have repeatedly relaxed mortgage rules:

• First-time buyers can access 90% LTV for properties below HK$10 million.
• Owner-occupiers can get 70% LTV for properties below HK$30 million.

The Northern Metropolis has emerged as a new rental driver. Following the October launch of the Northern Link railway project, construction workers are renting in Yuen Long and Hung Shui Kiu. Leases at Yuen Long’s The YOHO HUB and Hung Shui Kiu’s 汇都 II (Wui To II) range from HK$12,000 to HK$22,000 per month, with rental yields of 2.5%-4.1%. This demand, combined with rentals from professionals and mainland students, is expected to further boost the rental market.

According to the Estate Agents Authority, Hong Kong had approximately 37,588 licensed agents as of November (down 11% from the 2022 peak), but branch numbers are slightly increasing—reflecting market confidence in the recovery. Industry experts anticipate a more pronounced upturn in 2025, driven by policy support, infrastructure investment, and pent-up demand across all property segments.