Is the tide turning for Hong Kong’s ailing property market? When second-hand home prices are down almost 30 per cent from their peak in August 2021 and rents for grade A offices are more than 40 per cent lower than in the second quarter of 2019, talk of a recovery seems wildly premature.

But expectations, sentiment and the prism through which the performance and outlook for the sector are viewed are important. Since the beginning of this year, the mood in Hong Kong has improved markedly. Much of this is down to the unexpected and dramatic revival of the city’s stock market.

According to PwC, Hong Kong is on track to regain its position as the world’s top fundraising venue for initial public offerings (IPOs). Proceeds from new share sales are expected to reach at least HK$200 billion (US$25.5 billion) this year, up from just HK$46 billion in 2023.

While the equity market is not the property market, the remarkable turnaround in Hong Kong’s fortunes has challenged assumptions about the city’s financial decline and accentuated its role as the primary conduit between Chinese and global finance. The improvement in sentiment has brightened the outlook for the real estate industry and drawn attention to sources of resilience that were previously overlooked or downplayed.

This is a bold statement, particularly given the regular series of shocks buffeting Hong Kong, but the positives are stacking up. Mainland Chinese buyers are more active, purchasing 1,200 units in April, higher than the monthly average of 800 in the first quarter. Morgan Stanley says mainland buying power is supporting investment demand “due to relatively higher rental yields (at 3.5-4 per cent) compared with 1-2 per cent in Tier 1 cities in China”.