After years of disappointing performance, Hong Kong’s property market, a backbone of the local economy, has finally staunched losses amid significant improvements in residential and office activities, according to a new report.

Transactions in the residential property sector surged 63% year-on-year to 16,700 units in the three months to September 2025, Cushman & Wakefield says in its latest market report.

Underpinned by solid demand since March, approximately 45,700 houses have been snapped up in the first three quarters of 2025, exceeding the full-year figures for 2022 and 2023.

“Developers actively launched primary market projects at competitive prices and with incentives, prompting a resurgence in homebuyer interest, particularly for small-to-medium-sized flats,” says Rosanna Tang, executive director and head of research at Cushman & Wakefield Hong Kong. She expects a 2% inflation in residential prices at year’s end.

House prices witnessed 3.8% quarterly growth in the mass market, coupled with moderate growth in the middle and luxury segments.

Meanwhile, residential rents remain on a steady uptrend – rents are up 3.2% year-to-date, compared to a marginal decline in house prices.

“Although it isn’t the best recovery we seek, such improvement certainly plays a role to reassure the market,” says Edgar Lai, senior director, valuation and consultancy service, at Cushman & Wakefield Hong Kong. “The market is bottoming out and is on track to snap the three-year losing streak.”

Strong office sector

On the back of the strong stock market performance, particularly in initial public offerings, net absorption of grade-A offices in Q3 reached 401,000 square feet, a record not seen in six years, bringing the newly leased area in the first nine months of 2025 to 1.3 million square feet, exceeding the total for 2024.

Financials and banks formed the bulk of the demand, accounting for a third of the new leasing transactions during Q3. For instance, AMG Financial Group, Crédit Agricole, and HSBC scaled their respective office spaces during the period to meet expansion and relocation needs.

Office rents remain subdued, but the decline is expected to narrow amid upbeat sentiment.

Retail sales positive

While sales of high-end products are weak, including jewellery and watches, as well as fashion and accessories, other consumption items such as medicines, food, and alcohol remain intact.

With landlords being more realistic, high-street rents dropped as much as 6.5% in Q3, bringing the full-year rent decline forecast to 2%.

Optimistic retail sales moderated vacancy rates in the retail property sector. Among 91 foreign brands setting up stores in Hong Kong this year, the majority are in the food and beverage sector, which accounts for more than half of the total. Trademarks are predominantly from Asia-Pacific and mainland China, accounting for 41% and 39% respectively.

“The optimism can only be extended with stronger drivers and motivations,” shares Lai.