Mapping Future Trends in Hong Kong’s Real Estate

This article was co-authored with Jonathan Chau, Head of Investment Property & Private Office, Capital Markets, CBRE Hong Kong.

Amid strong economic headwinds, many would wonder: what lies ahead for Hong Kong’s economy?

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Our latest report on Identifying Prospects In A New Era of Economic Growth explores the fundamentals of Hong Kong’s economy and the way forward. Growth is occurring across many sectors. The economy is showing signs of recovery and some industries are performing at pre-pandemic levels.

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One pillar to look at is the tourism - Local spending has bounced back to pre-pandemic levels while inbound tourism presents a gap to catch up. The hotel and hospitality sector has evolved significantly, with the rise of boutique hotels, the impact of the COVID-19, and a shift towards sustainable practices over the past few years. Despite fewer tourists post-pandemic, Hong Kong continues to register the second highest tourist per capita ratio in Asia, just after Macau.

Shaping the outlook

China economic recovery

As China’s economic recovery accelerates, outbound travel demand from the mainland is picking up. The recent expansion of the Individual Visit Scheme (IVS) is set to tap into a 56 million population from ten Chinese cities. Despite economic constraints potentially limiting shopping expenditure, we anticipate a rise in arrivals from mainland China throughout 2024.

Expansion of talent pool

The government has introduced policies to attract students, high-calibre individuals and affluent families coming to Hong Kong. Since the end of 2022, the government has approved 120,000 talented individuals to relocate to Hong Kong through the talent admission and immigration schemes, laying a solid foundation for growth in services catering to high earners.

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In addition, the annual quota for non-local university students has been doubled from September 2024. Coupled with the return of expats, we expect to see a growing demand for housing and student accommodations.

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It’s important to note that these developments signify an expansion of the city’s high-skilled talent pool, aligning with plans to transform Hong Kong into a tech hub and bolster its long-term competitiveness.

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Initiatives to attract tourists

The government is doubling efforts to attract tourists around the world – both international and mainland China tourists.

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In the 2023/24 financial year alone, the government allocated over HKD 300 million to boost arts and cultural events. Over 210 government-led events are slated for 2024, promising a vibrant calendar for the second half of the year.

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MICE is also an important platform to attract high-spending business visitors. Beyond government-sponsored events, over 90 conference and exhibition events are in the pipeline, with more than half expected to draw global travellers. The government projects a 47% y-o-y growth in visitor arrivals, forecasting 50 million visitors in 2024.

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Hong Kong remains as a dynamic, vibrant city?

Hong Kong is currently on the right track to recovery. Various government initiatives, closer ties with mainland China and long-term city development blueprint will underpin sustainable growth for the economy in the long run.

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Positioned at the centre of Asia, Hong Kong offers unmatched convenience for both local residents and tourists. As the government initiatives continue to open doors for the growth of business and leisure travel and overseas talent to the city, this will ensure footfall for the city and drive the demand for both short-stay and long-stay accommodations.

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CBRE sees continued interest from private investors and operators in co-living spaces, student accommodations and serviced residences to expand the footprint.

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While high financing costs present challenges for the time being, the economic fundamentals and long-term growth prospects are gradually improving. Investors are keeping an eye on where the next potential is and to meet the future demand.

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For the full CBRE analysis on the Hong Kong’s economy, please click here .