Amidst economic uncertainties, Hong Kong’s property market continues to experience significant pressure. Residential prices have steadily declined, with the private domestic price index dropping from 337.4 in 2023 to 284.7 by February 2025. Additionally, office and retail sectors show signs of weakening performance. While rental indices for residential properties remain relatively stable, other segments face notable declines in both values and transaction activity.

The commercial and retail markets are particularly affected, as Grade A office rents in core districts like Central and Wan Chai continue to fall. Retail rents across Hong Kong Island, Kowloon, and the New Territories also dropped compared to the previous year. However, industrial properties exhibit resilience, maintaining steady yields despite marginal declines in rental indices. Transaction volumes across all sectors have slowed significantly due to cautious investor sentiment and uncertain economic conditions.

Residential and Commercial Sectors Under Pressure

In early 2025, Hong Kong's property market reflects a challenging environment, especially within residential and commercial spaces. Private residential prices have shown consistent downward trends, while office rentals, particularly in prime locations, are experiencing significant drops. Despite this, rental stability persists in some areas, offering a glimmer of hope amidst broader market struggles.

Private residential prices have plummeted, with the domestic price index falling from 337.4 in 2023 to 284.7 by February 2025. This decline underscores growing concerns among buyers and investors. Meanwhile, the office market is under mounting pressure, especially for Grade A properties in key districts such as Central and Wan Chai. The overall rental index for private offices decreased from 227.7 in 2023 to 215.0 by February 2025, indicating a clear shift in demand dynamics. Although rental performance for residential units remains somewhat resilient, hovering at 193.5 in February 2025 compared to 181.1 at the end of 2023, this does little to offset the broader downturn affecting other segments.

Industrial Resilience Amid Sluggish Transactions

While many property sectors struggle, industrial assets demonstrate relative strength. Rental indices for private flatted factories show only slight decreases, contrasting sharply with the volatile performances seen in other categories. Furthermore, transaction activity has slowed dramatically across both residential and non-residential markets, reflecting widespread caution among participants.

Industrial properties stand out as one of the few bright spots in an otherwise subdued market landscape. Their rental indices have experienced only minor declines, preserving stability in yields that contrast starkly with the sharp reductions observed in residential returns. For instance, industrial yields remain robust compared to the compression witnessed in other asset classes. However, the slowdown in transactions affects all sectors equally. Late 2024 and early 2025 saw a marked decrease in sales and purchase agreements, driven by heightened uncertainty among both investors and end-users. Retail properties, too, grapple with headwinds, as average rents across Hong Kong Island, Kowloon, and the New Territories fell compared to the prior year. These developments highlight how pervasive challenges continue to reshape Hong Kong’s property market dynamics.