Primary sales in the property market are expected to rise 3 percent in 2027, whereas home prices are forecast to rise another 6 percent in the coming year, as Hong Kong property is entering its second phase of recovery, with the earnings transmission becoming more important than the physical-market rebound, according to Citi Research.
The bank predicts home prices to recover to around the October 2022 level by end of 2027, while remaining 11 percent below the August 2021 peak. Residential rents are expected to rise another 6 percent in 2027, taking it to 15 percent above the previous peak.
Lower funding pressure, yuan appreciation, record IPO fundraising, talent inflows, and improving transaction activity supported residential, retail and office fundamentals this year, Citi said. Looking into 2027, these drivers should remain supportive but may become less powerful, as further yuan appreciation appears less certain after the strong gains of the past two years, IPO activity is unlikely to repeat record levels, talent approvals may moderate, and market expectations for the 2027 US rate path remain divided.
In the second phase next year, the property market focus should shift from whether demand has recovered to whether owners can monetize that demand through higher selling prices, better development margins, positive rental reversions, and stronger recurring income, Citi stated in its forecast, seeing that Hong Kong property is entering its second phase of recovery, with the earnings transmission becoming more important than the physical-market rebound.
Meanwhile, the bank says rental recovery should accelerate to plus 8 percent in 2027, leaving rents 27 percent below the previous peak. Tightening vacancy and strong demand should support further spot-rent growth, followed by improving reversions. Overall Grade-A office rents should remain flat in 2026, and rise only 1 percent in 2027E, reflecting continued supply digestion in non-core districts.
