Morgan Stanley lifts Hong Kong property to ‘attractive’, with rebound to extend into 2027

Morgan Stanley upgraded Hong Kong’s property sector to “attractive”, noting that an all-round improvement in the city’s economy and a policy-driven recovery will continue to push prices higher this year.

The US investment bank forecast home prices to rise around 10 per cent in 2026, with further gains expected in 2027, pointing out that the ongoing rebound marks the start of a new upcycle.

“We expect all three sub-segments – Hong Kong residential prices, Central office rents and retail rents – to record positive year-on-year growth for the first time since 2018,” Morgan Stanley said in a report on Monday.

Hong Kong’s lived-in home prices rose for a sixth straight month in November, lifting the official price index to a 16-month high and translating into a 3.5 per cent cumulative rise in 2025, according to government data. In the office market, prime Central rents rose 1.6 per cent in the fourth quarter, while vacancy rates across core districts had improved since midyear according to Cushman.

The housing recovery that began in mid-2025 was partly driven by a drop in borrowing costs, but lingering weakness in China’s property sector and global economic uncertainty continue to weigh on sentiment.