WHARF REIC(HK:01997) Zhi Tong Cai Jing·2026-01-06 09:58Core Viewpoint - Morgan Stanley prefers the office sector over the retail sector in Hong Kong real estate, noting that while office vacancy rates remain high, they are improving, with Central expected to benefit first [1] Group 1: Office Sector - Morgan Stanley favors Central over non-core areas for office properties, with Hongkong Land and Hysan Development being preferred over Wharf Real Estate Investment [1] - For the outlook on Hong Kong office rentals this year, Morgan Stanley expects a 3% increase in Central rents, while overall office rents are projected to decline by 3% [1] Group 2: Retail Sector - In the retail sector, Morgan Stanley prefers mainland luxury retail stocks over Hong Kong retail stocks, with Hang Lung Properties favored over Wharf Real Estate Investment and Link REIT; Swire Properties is also preferred over Wharf Real Estate Investment [1] - The retail sector faces pressure on shopping mall rents due to online sales and competition from the Shenzhen market [1] Group 3: Risks and Challenges - Morgan Stanley advises avoiding Wharf Real Estate Investment due to challenges such as market share loss and tenant retention risks, exemplified by Alibaba's acquisition of the Grade A commercial building "One Island East" in Causeway Bay, leading to its relocation from Times Square [1] - Growth in mainland duty-free shopping and inbound tourism may impact luxury sales in major shopping malls [1]