Savills' latest Investment Market in Minutes highlights a further widening divide in Hong Kong's real estate market in the second quarter of 2026. While the residential sector remained resilient, supported by buyers from mainland China, commercial properties continued to reprice.
At the same time, the growing supply of distressed assets, coupled with easing financing costs, has created acquisition opportunities for well-capitalized institutions, owner-occupiers and overseas investors seeking quality assets at discounted prices.
Total non-residential investment volume rose 120% YoY to HKD 22.3 billion in the first half of 2026, signalling a shift from market weakness towards a more selective recovery. However, buyers remain highly focused on asset quality, pricing, financing terms and stable income streams.
- Non-residential investment transactions exceeding HKD 50 million totalled HKD 22.3 billion in the first half of 2026, representing a 120% YoY increase. Office and hotel properties accounted for 67.6% and 21.6% of total investment volume respectively, making them the leading sectors.
- Price corrections in the commercial property market continued. Grade A office prices have fallen approximately 49% from their 2018 peak, while prime street shop prices are about 65% below their 2013 peak. Some receivership assets were clearing at 35% - 56% discounts.
- Office investment activity showed early signs of stabilisation, particularly for best-located core buildings with strong long-term owner-occupier or investment appeal. Overall Grade A office vacancy declined by 0.4 percentage points QoQ to 14.8% in Q2 2026.
- Residential demand remained resilient. Mainland Chinese buyers accounted for approximately HKD 107.1 billion of residential transactions in the first half of 2026, equivalent to around 75% of the total recorded in the whole of 2025. Transactions of super-luxury homes priced above HKD 100 million totalled 134, up 91% YoY, with mainland Chinese buyers accounting for 69 of these deals.
- The hotel and student accommodation sectors continued to benefit from solid fundamentals. As of May 2026, average hotel room rates had recovered to 98% of their 2018 peak, while occupancy reached 84% in the second quarter. Meanwhile, the number of non-local students rose 97% from 46,800 in the 2020/21 academic year to 92,100 in the 2024/25 academic year, resulting in an estimated shortfall of 72,000 student beds and supporting demand for student housing conversions and investment opportunities.
Mr. Jack Tong, Director, Research & Consultancy of Savills commented, “There is no shortage of capital in Hong Kong's market. The key challenge today is that buyers have become far more disciplined on pricing and return expectations. While the growing supply of distressed assets may continue to exert downward pressure on prices in the near term, further price discovery and asset repricing should help unlock a new wave of transactions.
Looking ahead, the market is expected to maintain a selective recovery in the second half of the year. Policy friction from State Council Order No. 837, latest offshore trust taxation rules and lender-driven supply are likely to be two key factors shaping market performance in H2 2026. Capital will continue to gravitate towards well-priced, high-quality assets supported by stable cash flows.”
Mr. Peter Yuen, Managing Director, Investment & Sales of Savills said, “The strong rebound in the non-residential investment market during the first half of the year reflects growing interest from owner-occupiers, institutions and overseas investors seeking to capitalise on the repricing of quality assets. Office and hotel properties attracted the greatest attention, while hotels with conversion potential, serviced residential projects and student accommodation opportunities continued to draw long-term capital.
However, the recovery remains selective rather than broad-based. Investors are expected to stay focused on properties in prime locations, high-quality assets and opportunities with clear value-add potential.”