While technology enthusiasts lose sleep over every AI development, Hong Kong's stereotyped old-guard property stocks have quietly staged a remarkable rebound. Since the beginning of the year, local Hong Kong developers have charted an independent upward trajectory. Sun Hung Kai Properties and Henderson Land Development have seen their share prices repeatedly hit new highs, with Sun Hung Kai surging up to 55% at one point, pushing its market capitalization past 400 billion Hong Kong dollars.
This long-awaited rally is fundamentally supported by earnings growth. In the second half of 2025, Sun Hung Kai's property sales revenue reached 32.355 billion yuan, a significant increase of 94.3% year-over-year. Henderson Land also achieved a 17% growth in property sales revenue for 2025.
The clear driver behind this rebound is the "dual growth in volume and price" within the Hong Kong property market. From the demand side, the market's recovery began with policy liberalization. The "spice removal" policies lowered the barrier to entry for non-local residents and multi-property owners in Hong Kong, while the Top Talent Pass Scheme facilitated the precise introduction of high-net-worth individuals.
However, while demand increased, supply appears to have been constrained. The four major property families in Hong Kong account for 40-50% of new home sales. This high market concentration gives leading developers significant pricing power over the pace of project launches, further driving up transaction prices.
The underlying factor supporting the re-rating of Hong Kong real estate is the strengthening of its geopolitical dividend. In an era of deglobalization and intensified geopolitical competition, Hong Kong's role as a bridge between East and West has amplified its safe-haven attributes. This is triggering a comprehensive value reassessment of assets across all dimensions, extending beyond the real estate sector alone.
/ 01 / The Growth Engine Has Shifted
In the property business, being in the same market does not necessarily mean sharing the same fate. Compared to the roller-coaster trajectory of mainland Chinese developers following the property market's booms and busts, the volatility curve of Hong Kong's established property "old guards" appears remarkably stable. Between 2021 and 2024, while the Hong Kong property market corrected by nearly 30% from its peak, Sun Hung Kai fell by only 9%, and Henderson Land even managed a slight 1% increase against the trend.
The core reason for this divergent fate lies in the difference in business models. Unlike mainland developers who once fervently believed in a "high turnover, high leverage" model, mainstream Hong Kong developers adhere to a dual-engine strategy of "development + holding." The advantage of this model is that it allows them to profit from property sales during boom times and rely on rental income to stabilize profits during downturns.
Compared to the development business, which is highly susceptible to cyclical swings, property leasing is a standard "cash cow." In Sun Hung Kai's profit structure, the leasing business, contributing less than 20% of revenue, accounts for over 52% of profits. The case is even more pronounced for Henderson Land, where leasing profits have at times supported up to 80% of total earnings. It can be said that during the prolonged winter of the Hong Kong property market, it was the rental income book that supported the profit foundation of Hong Kong-based developers.
However, starting last year, the primary growth engine changed. In the second half of 2025, Sun Hung Kai's total rental income remained stable at 12.285 billion Hong Kong dollars. In contrast, the residential sales segment experienced a major boom: property sales revenue reached 32.355 billion yuan, surging 94.3% year-over-year. Henderson Land's story was similar: rental income saw a slight decline, but residential sales revenue grew by 17% year-over-year.
Supporting this take-off in sales was a long-awaited "increase in both transaction volume and price." According to data from the Hong Kong SAR Land Registry, the total number of building sale and purchase agreements registered in Hong Kong for 2025, encompassing residential properties, parking spaces, and commercial/industrial units, reached 80,702, an increase of 18.7% year-over-year, hitting a four-year high.
This transaction heat quickly translated into price increases. In January 2026, the Hong Kong Private Domestic Housing Price Index reached 301.4, achieving an eight-month consecutive winning streak. Goldman Sachs even revised its 2026 house price growth forecast upwards from 5% to 12%. While data showing rising volume and prices is readily available, the crucial question is: what is the underlying logic?
/ 02 / Demand Has Arrived, But Supply is Constrained
In 2013, an essay titled "Li Ka-shing's City" by a Hong Kong primary school student went viral online. The core theme of this candid piece was captured in its concluding remark: "Li Ka-shing, truly living up to his name, Hong Kong is indeed the Li family's city." While the theme was clearly exaggerated, it reflected the strong influence wielded by Hong Kong's four major property families over the real estate sector. To this day, Sun Hung Kai, Henderson Land, CK Asset Holdings, and New World Development still account for 40-50% of new home sales in Hong Kong.
Understanding this background is key to comprehending the logic behind the rising volume and prices in the Hong Kong property market. Firstly, from the demand side, the recovery of the Hong Kong property market began with the "spice removal" policies. These policies refer to the removal of additional stamp duties—including the Buyer's Stamp Duty, New Residential Stamp Duty, and Special Stamp Duty—that previously applied to residential transactions by non-Hong Kong residents and local multi-property owners. All buyers now pay a unified Ad Valorem Stamp Duty rate. After implementation, the stamp duty rate for non-local buyers and multi-property purchasers dropped from 15% to a maximum of 4.25%.
One year after the implementation of the spice removal policies, the number of residential building transaction registrations in Hong Kong reached 62,832, an increase of 18.3%. Concurrently, Hong Kong's Top Talent Pass Scheme also played a role. By the end of 2025, the scheme had received over 150,000 applications, approving more than 120,000, with approximately 105,000 top talents having arrived in Hong Kong. Among those successfully renewing their visas, about 95% had incomes higher than the Hong Kong median income, with half earning nearly double that median. Upon arrival, these high-income individuals either purchased properties directly, boosting transaction volumes, or rented, pushing up the rent-to-price ratio. In 2025, the gross rental yield for Hong Kong residential properties overall ranged between 3.0% and 4.1%. These attractive rental yields further stimulated investment demand among local high-income groups in Hong Kong.
However, just as demand was unleashed, the supply of new homes in Hong Kong seemed to become constrained, as if by a "tightening curse." After August 2025, the pre-sale approval process for purely residential projects slowed down, leading to a tightening supply of new developments: the market shifted from a situation where two buyers competed for one property to an average of 1.1 buyers vying for each available unit.
Some media speculate that Hong Kong developers prefer to sell existing, approved inventory rather than rushing new projects to market and engaging in price wars. Is there intentional "supply control to maintain prices" by Hong Kong developers? It's difficult for outsiders to conclude definitively. Historically, however, there has been persistent suspicion in Hong Kong public opinion accusing them of "land hoarding and monopolistic practices to push up prices." Data shows that Hong Kong has a significant amount of idle land. Out of the total land area of over 1,100 square kilometers, more than 400 square kilometers are country parks, and unused vacant land has even been used for stacking containers. Meanwhile, many young people spend millions to squeeze into nano-apartments of around 20 square meters.
Looking beyond pure supply and demand dynamics, the amplification of Hong Kong's geopolitical dividend is also fueling a re-rating of the property market.
/ 03 / The Unexpected Geopolitical Dividend
Data does not lie; it reveals who is buying. In 2025, there were 80,702 property transaction registrations in Hong Kong, with a total value of 614.3 billion Hong Kong dollars. Among these, mainland Chinese buyers accounted for 13,906 registrations, valued at 137.9 billion Hong Kong dollars. This represents 17.2% of the total transaction volume and 22.4% of the total value by mainland buyers. Comparing this with 2023 using the same metrics, the share of transactions by mainland buyers increased by nearly 7 percentage points, and their share of the total value increased by over 6 percentage points.
While the spice removal policies certainly encouraged mainland buyers to purchase property in Hong Kong, the deeper reason lies in the strengthening of Hong Kong's geopolitical dividend. In an era of deglobalization and intensified geopolitical friction, geopolitics has replaced simple Return on Investment as a critical variable influencing global capital flows. In the current landscape, where Eastern and Western industries have their respective strengths and weaknesses, yet capital flows cannot be easily severed, Hong Kong, leveraging the stable environment of "One Country, Two Systems," its robust legal system, and mature financial infrastructure, has acquired a dual safe-haven attribute.
It serves as a "forward staging post" for mainland capital going global: the influx of mainland funds into the Hong Kong property market is essentially seeking a path that both hedges geopolitical risks and allows for low-cost experimentation overseas. It is also the "preferred gateway" for international capital allocating to China: the phenomenon of H-shares of dual-listed companies trading at a premium exceeding 40% compared to their A-shares demonstrates that, in the eyes of external investors, Hong Kong remains a direct bridge to China's industrial dividends with controllable risks.
This implies that within the crevices of geopolitical competition, the value logic of Hong Kong assets has transcended the property market itself, extending to a comprehensive re-rating of assets across all categories. This restructuring is attracting more capital. According to Hong Kong media reports, some institutions have noted a significant increase in inquiries from clients in the Middle East recently, surging over 50% month-over-month, with very detailed questions—ranging from Hong Kong stock investments and bond allocations to insurance products and specific requirements for setting up family offices in Hong Kong.
This enhancement of the geopolitical dividend is influencing the direction of capital flows and reshaping the return curves for investors.