Hong Kong’s prime market turns a corner

We may look back on the early months of 2026 as an inflection point in prime residential property markets. 

The rise of challengers to the world's most established wealth hubs was among the major trends of the post-pandemic period, but seemingly perpetual geopolitical volatility is prompting the wealthy to look again at cities that have seen outflows in recent years.
Hong Kong is perhaps the best example. A downturn that began in 2021, driven by high rates, weak growth, emigration and fragile sentiment, may have run its course. Shares in local developers rose sharply this week after Morgan Stanley raised its estimate for home-price growth to 12% this year from 10%, and expects another 5% in 2027.

“We have turned more bullish, driven by strong sell-through, rising average selling prices at subsequent launch phases, declining inventory levels, and falling land supply,” analysts including Praveen K Choudhary wrote in the note covered by Bloomberg. “We see tailwinds from capital and talent coming from the Middle East and mainland.”

Perks and incentives

Readers of The Wealth Report 2026 might have seen this coming. While our Prime International Residential Index (PIRI 100 – page. 24) showed values had slipped 2.1% during 2025, the city saw one of the strongest upticks in super-prime sales with 81 US$10 million+ transactions in Q4, second only to Dubai.

Momentum is being driven by a resurgent IPO market, inflows of mainland Chinese wealth and the introduction of a new talent visa scheme. But there are also now tentative signs that the conflict in the Middle East is prompting moves by ultra-high-net-worth individuals (UHNWI), particularly family offices and entrepreneurs with global assets. This is also beginning to play out in key European hubs like London and Monaco – see Friday's note.

What differentiates Hong Kong from London is the government’s active push to lure UHNWIss from the likes of Dubai and Singapore. While it has recently raised stamp duty on ultra prime residential deals above HK$100 million, it has scrapped most additional ‘cooling’ stamp duties since 2024, sharply lowering effective property taxes for many investors. At the same time, it is expanding a suite of tax incentives, perks, visas and residency routes for talent and the wealthy – the latest proposals include widening its 0% carried interest regime so that more asset and wealth managers, not just traditional private equity executives, can benefit. The UK government is moving in the opposite direction, tightening the tax treatment of carried interest from this year. 

Persistent inflation

Our headline PIRI 100 index climbed by 3.2% in 2025, slightly below the 3.6% increase recorded in the previous year. Of the 100 markets tracked, 73 saw prices increase while 24 experienced declines. The average growth rate masks significant divergence, ranging from surging values in top-tier new-build apartments in Tokyo (58.5%) to notable retreats in major Chinese cities such as Guangzhou (-12.2%).

Regional performance varied markedly. Markets in the Middle East led with average growth of 9.4%, driven largely by Dubai’s 25.1% increase. Latin America and the Caribbean followed with average growth of 4.7%, with Asia-Pacific (3.6%) and Europe (3.3%) close behind. Only North America hit negative territory, with prices falling by an average 0.9%, reflecting weakness in Canadian markets.

With mainstream global house prices rising by 2.9% in 2025, prime markets continue to outperform their wider national peers, a trend evident since early 2023, reflecting their lower reliance on mortgage finance and a degree of insulation from post-2022 interest rate hikes. This momentum has played out against a challenging backdrop of persistent inflation, higher-for-longer interest rates and geopolitical volatility that continues to reshape cross-border wealth flows.

Operational assets

Investors deployed £2.1 billion into the UK’s purpose built student accommodation (PBSA) in the first quarter of 2026, according to new Knight Frank data. That’s the strongest start to a calendar year for the sector in more than a decade. 

While the opening quarter was capital heavy, it was not deal heavy. A total of 20 transactions completed during the quarter, broadly consistent with long term norms, indicating that activity was driven by a number of capital intensive transactions rather than a broader expansion in deal flow.

Transaction sizes were notably skewed in the first quarter, with five of the 20 deals transacting at values in excess of £150 million. Most prominent was the completion of Unite Group’s acquisition of Empiric Student Property, agreed at approximately £720 million and adding around 7,700 beds across 68 assets in 22 cities to the Unite platform. 
Some 65% of transactions in the first quarter were operational asset sales. Land transactions represented 20% of activity, with joint venture structures comprising the remaining 15%. 

In other news...

Residential development land values weakened in early 2026 as renewed geopolitical uncertainty and persistent viability pressures weighed on demand. While prices appear close to a floor, fragile confidence and rising costs continue to limit activity, particularly in urban markets – Ollie Knight has more.

Elsewhere – Gilt traders warn of ‘swing to the left’ as Labour faces electoral losses (FT).