Morgan Stanley Upgrades Hong Kong Property Forecasts as Residential Rally Spreads to Office and Retail
Bank sees 12% home price rise in 2026, forecasts retail sales growth of 5% and office/retail rent recovery by year-end
Quick Look
- Morgan Stanley has upgraded its Hong Kong property market forecasts, projecting 12% home price growth in 2026 (up from 10%) and 5% in 2027.
- The residential upturn is spilling over to struggling office and retail sectors, with retail sales forecast to rise 5% this year.
- Shop rents declined 1.1% in Q1 but are expected to turn positive by year-end, following a 10% decline in 2025.
AI-generated summary
Why It Matters
Hong Kong's property market has faced significant pressure in recent years, with office and retail rents declining sharply in 2025. The residential segment had shown resilience, and analysts now see that strength spreading to other sectors.
Hong Kong’s property market is poised for a broad-based recovery as a strong upturn in the residential segment spills over to the struggling office and retail sectors, according to analysts. Morgan Stanley upgraded its forecast for the city’s home prices to a 12 per cent increase this year from 10 per cent previously and anticipated another 5 per cent rise in 2027, it said in a report on Monday. Meanwhile, retail sales were buttressed by rising tourist numbers, a string of mega-events and the stronger yuan, leading to a higher forecast for sales this year, up 5 per cent compared with an estimate of 3 per cent previously, the New York-headquartered bank said. As of the first quarter, shop rents in the city had declined 1.1 per cent from a year earlier. Morgan Stanley forecast that rentals would “turn positive by year-end” although for the entire year a 3 per cent decline was likely. In 2025, rents fell 10 per cent. “We see office and retail following very strong home price increases in Hong Kong,” said Praveen Choudhary, head of Hong Kong and India property research at Morgan Stanley.
Open Questions
- What specific mega-events are driving retail sales?
- How will interest rate changes affect the property recovery?
- What is the timeline for office rent stabilization?
