_Premium Central Drives Office Leasing Momentum as West Kowloon & Tsim Sha Tsui See Active Relocation

Knight Frank's latest Hong Kong Quarterly Report highlights varied property market performance. Demand for Grade‑A office space on Hong Kong Island remained driven by financial institutions, while office leasing activity in Kowloon continued to see Tsim Sha Tsui as a popular destination among Chinese Mainland companies and SMEs. The residential market remained resilient in Q1 2026, supported by active Chinese mainland demand. Meanwhile, retail sentiment strengthens amid the recovery in tourism, robust education demand and increased lifestyle consumption.

Grade-A Office

Hong Kong

Premium Central continued to outperform, recording solid rental growth of 5.1% quarter‑on‑quarter, with leasing momentum spilling over into neighbouring districts. Traditional Central and Admiralty also recorded rental growth, while North Point, Quarry Bay and Causeway Bay remained under pressure. The finance sector continued to be the primary demand driver. While hedge funds and quantitative funds were highly active in 2025, leasing activity in Q1 2026 shifted towards traditional securities and asset management firms, alongside banks establishing or expanding wealth management centres.

Looking ahead, leasing momentum is expected to strengthen further in Q2, extending beyond Premium Central to Traditional Central, Admiralty and Wan Chai.

Kowloon

In Kowloon, two major leasing transactions in West Kowloon, involving approximately 350,000 sq ft of pre‑committed space, generated strong leasing momentum. Major leases secured at IGC and AST continue to highlight expansion demand from large corporations, particularly for offices offering large floor plates, high specifications and sea views. Meanwhile, Tsim Sha Tsui remained popular among Chinese Mainland companies and SMEs seeking district upgrades.

Leasing activity in Kowloon East was largely dominated by renewals or consolidation‑related relocations. As a result, vacancy levels in the district remain elevated, continuing to constrain rental growth.

Residential

The residential market remained resilient in Q1 2026, supported by active Chinese Mainland demand. Overall transaction volumes increased by 9% quarter‑on‑quarter to 18,654 units, with secondary sales rising 13% QoQ, while primary sales remained broadly stable.

Heightened geopolitical uncertainties have further strengthened Hong Kong’s appeal as a relative safe-haven. With Chinese Mainland buyers remaining active, primary market transaction volumes are expected to remain firm in Q2, but growth is expected to stabilise.

The luxury residential segment also strengthened during the quarter, recording 96 transactions above HK$78 million, representing a 19% quarter‑on‑quarter increase. Meanwhile, the leasing market continued its upward trajectory, supported by the influx of mainland professionals relocating to Hong Kong. Both mass and luxury rental markets recorded sustained growth, with prime locations such as Wong Chuk Hang, Ap Lei Chau and the Western District remaining highly sought after.                

With ongoing improvement in the transaction activity, sentiment and liquidity conditions, the market recovery is strengthened by solid end-use demand and increasing investment demand, supporting an uplift of full year price growth forecast to 8%–10%.

Retail

Hong Kong’s retail sector showed signs of recovery in early 2026, supported by strong tourism demand and major festive events. Total retail sales increased by 11.8% YoY between January and February, with discretionary spending outperformed.

Tourism continued to underpin retail performance, with visitor arrivals rising 18.4% YoY to 9.95 million over the two-month period. Chinese Mainland visitors accounted for approximately 79% of total arrivals, reinforcing their importance to retail activity in prime shopping districts and luxury-focused segments.

Education‑related demand has also emerged as a support for the retail property market, with several large retail assets acquired or leased for school use, highlighting adaptive reuse trends. . Meanwhile, cultural events and broader cultural engagement are increasingly supporting Hong Kong’s retail market by boosting footfall, visitor spending and place vitality.

Looking ahead, retail sales are expected to remain stable, supported by major international events such as Art Basel Hong Kong and the Hong Kong Rugby Sevens, which are expected to continue driving visitor arrivals and consumer spending.