In the gleaming skyline of Hong Kong, real estate is more than just concrete and glass — it is the pulse of the city’s identity, culture and economy, shaping lives and legacies alike. Hong Kong’s history and evolution is that of its skyline too. This ever-evolving market reflects the dreams of and challenges to its people, fueling the ceaseless energy of a metropolis that never sleeps. As a critical cornerstone of Hong Kong’s economy and heritage, real estate is not merely about property — it is a vision for the future, a testament to the city’s resilience and ambition.
And, in any case, housing is an issue of great public concern in Hong Kong. For example, according to a public opinion survey conducted before the release of Chief Executive John Lee Ka-chiu’s Policy Address in October, housing emerged as the most worrying concern among the public.
Even though the topic of my doctorate was that of Hong Kong real estate law and economics, focusing on the connection between land law and town planning in the city from both a legal and economic perspective, it has been a while since I wrote an op-ed in this newspaper talking about real estate and housing in Hong Kong, since I have focused most of my articles on the topics I am currently working on, i.e., finance and technology (the digital yuan, green finance, economic growth, etc).
Much has changed since my last article, since, in that one, titled Bubble Burst Unlikely In HK’s Resilient Property Market (China Daily HK Edition, Jan 10, 2020), written just before the COVID-19 pandemic started, I obviously could not have foreseen the pandemic and its effects.
That being said, even if the past few years showed us property prices in Hong Kong remaining depressed amid a chronic supply shortage and falling property demand caused by the continuing affordability crisis, poorer economic conditions and surging interest rates in the city, 2025 is expected to be a better year for Hong Kong’s real estate market.
Hong Kong’s Land Registry logged 5,510 sale and purchase agreements for all building units received for registration in December, up 46.4 percent year-on-year, according to government data released last week.
Also, as per data compiled by Midland Realty, a total of 67,662 deals for new and lived-in homes, offices, shops, industrial units and car parking spaces were completed as of Dec 30, up 16 percent from 58,035 in 2023 and the highest level since registering 96,133 deals in 2021.
Moreover, according to Knight Frank in its recently published “Hong Kong property market 2025 forecasts”, “As interest rates gradually decrease, we expect developers to accelerate the launch of firsthand projects and provide more incentives to attract potential buyers. It is expected that the property market will perform better in 2025.” Knight Frank forecasts that the government land sale revenue in 2025 will range from HK$8 billion ($1.03 billion) to HK$14 billion, while annual land premiums are expected to reach HK$10 billion to HK$15 billion.
Certainly, sales of new and lived-in homes are supported by the withdrawal of property curbs in February 2024, as well as other favorable measures introduced in the 2024 Policy Address to boost the real estate market. Those measures are expected to stimulate more home purchases by end users and investors. Meanwhile, Hong Kong’s residential rents are expected to rise 4 percent in 2025, driven by strong demand for rental flats from Chinese mainland professionals and students residing in Hong Kong.
While Hong Kong’s real estate market has seen better times, it seems it will do better in 2025 than in the previous few years, which is good news indeed, even though some challenges remain.
On the plus side, apart from the data I just mentioned, we need to bear in mind that Hong Kong went through the Asian financial crisis, SARS, the global financial crisis and the COVID-19 pandemic without any evident significant outflow of capital and without diminishing its role as one of the world’s most important financial centers. This happened because of Hong Kong’s strength, because of its resilient nature and how stable Hong Kong has been throughout the years.
Furthermore, Hong Kong now is embracing opportunities from the Guangdong-Hong Kong-Macao Greater Bay Area development, and, by playing a proactive part in China’s 14th Five-Year Plan (2021-25), the HKSAR is unleashing its potential thanks to unreserved support from the central authorities for advancing key strategies to enahnce its superconnector role, including the promotion of the digital yuan (eRMB) and environmental, social and governance (ESG).
In addition to the huge role that the Greater Bay Area will play in Hong Kong’s future, we can also mention other opportunities such as fintech development in Hong Kong, the HKSAR’s anticipated entry into the Regional Comprehensive Economic Partnership, and the various Connect Schemes between the city and the mainland.
On a macro perspective, Lee said in August that Hong Kong’s 2025 GDP growth will exceed that of 2024. He noted that Hong Kong is in the middle of a transitional period, facing uncertainties including the global outlooks for the economy and interest rates, but that 2025 is expected to be better.
Also, the Bank of East Asia expects the mainland and Hong Kong economies to register moderate growth in 2025, amid risks that will weigh on interest rates. The bank expects Hong Kong’s economy to grow 2.5 percent this year, and the mainland’s economy is expected to grow 4.8 percent.
Furthermore, Hong Kong’s exports are projected to grow 4 percent in 2025, continuing the positive trajectory seen throughout 2024, according to the Hong Kong Trade Development Council’s forecast.
However, some challenges remain. For instance, uncertainties over the new US administration’s economic and interest-rate policies have led local investors to adopt a wait-and-see approach to commercial property investments.
As I mentioned in my latest articles, a new trade war would be a huge mistake, since trade-related tensions would not only harm both China and the US but also third parties, and, in any case, this would certainly harm Hong Kong’s property market.
Moreover, the greatest issue for the younger generation is its inability to own flats because of the disproportionately high housing prices relative to its income. While the special administrative region government addressed this problem by relaxing the maximum loan-to-value ratios of mortgage loans to 70 percent for all home purchases, while easing the maximum debt servicing ratio to 50 percent for all home purchases, I think part of the issue will remain for the time being.
To sum up, after a few not so good years, Hong Kong’s property market is expected to perform better in 2025. Opportunities abound in sustainable development, with green buildings accounting for 18 percent of new projects, and government initiatives like the Northern Metropolis development paving the way for growth. This dynamic landscape offers bold prospects for investors and homebuyers willing to embrace innovation, revealing a future ripe for transformation. While Hong Kong faces some challenges, especially external ones derived from a potential new trade war, we can be optimistic when it comes to the real estate market this year.
The author is a fintech adviser, a researcher and a former business analyst for a Hong Kong publicly listed company.
The views do not necessarily reflect those of China Daily.
