Primary transaction volume stays at a relatively high level as developers pushed new launches

• After a sharp decline in the HIBOR during Q2 2025, rates rebounded in Q3 2025, with the one-month HIBOR reaching 3.6% by end-September. Meanwhile, major banks reduced their prime rates by 12.5 bps, following the FED’s rate cut in September.
• In Q3 2025, housing demand kept shifting towards new projects. In July, Deep Water Pavilia II in Wong Chuk Hang sold 81 out of 88 units launched in the first round. There were also notable PRC buyers eyeing new projects, especially in urban/luxury locations.

One residential site is tendered in Q3 2025

• In Q2 2025, 29 luxury residential units were completed. These included 21 units at Nam Pin Wai in Sai Kung and four units at ‘Jardini’ in Jardine’s Lookout. A total of 288 luxury residential units is expected to be completed in 2025.
• In Q3 2025, the government awarded a residential site at Hoi Chu Road, Tuen Mun (TMTL 569), to Sino Land at an Accomodation Value of HKD 3,860 per sq ft.

Momentum continues in the luxury leasing market

• The inflow of non-local talent continued to support the demand in the luxury leasing market, especially during the summer peak season, with rents rising by 2.0% q-o-q in Q3 2025.
• Capital market activity in the high-end segment contracted in Q3 2025. The transaction volume for properties valued at or above HKD 50 million dropped by 31.4% q-o-q. Meanwhile, luxury residential capital values declined by 1.7% q-o-q in Q3 2025.

Outlook: Primary price cuts to weigh on secondary pricing

• Large inventory and financial pressure will continue to weigh on market recovery. Developers will likely cut prices on primary projects to offload stock. We expect mass and luxury residential capital values to drop by about 5% and 5-10% in 2025, respectively.
• Luxury rents are projected to continue rising, supported by the resilient primary market and strong leasing market. We expect luxury residential rents to rise by 0-5% in 2025.