Summary of Key Points from J.P. Morgan's Expert Meeting on Hong Kong Property Sector Industry Overview - **Industry**: Hong Kong Property Sector - **Expert**: Mr. Joseph Tsang, Chairman of Jones Lang LaSalle (JLL) Hong Kong Core Insights Residential Property - JLL forecasts a **5% decline** in home prices for mass units and **5-10% decline** for luxury units in 2025, primarily due to oversupply and financial pressures on developers [1][4] - JLL expects home prices to stabilize in 2026 (up or down **1-2%**) if HIBOR remains low and geopolitical shocks are absent [1][4][8] - J.P. Morgan's more optimistic forecast anticipates a **3-5% rebound** in home prices in 2026 if certain conditions are met [1][4] - Rental growth is expected to be **0-5%** in 2025 due to an influx of new talent and students [1][4] Office Market - JLL predicts **5% decline** in Grade-A office rents and **5-10% decline** in capital values in 2025, with high vacancy rates (13.2%) persisting [1][4][13] - Rising IPO activity may stimulate demand, but insufficient to reverse current trends [1][4][13] - Tenants prefer newer office buildings with ESG specifications, leading to pressure on older assets [1][4][13] Retail Sector - Retail rents and capital values are expected to drop **5-10%** in 2025, but substantial corrections have already occurred (high-street shops are **72% below peak**) [1][4][18] - JLL anticipates a stabilization of retail rents in 2026, supported by active leasing momentum [1][4][18] - Retail assets yielding **~6%** are attracting strong buyer interest, indicating a potential floor for valuations [1][4][5] Additional Considerations - **CRE Risks**: Overall debt associated with commercial real estate (CRE) risks may exceed **HK$400 billion**, with 34% classified as high risk [1][5][16] - **Mainland Chinese Buyers**: They account for **~50%** of homebuyers in urban districts, significantly influencing market dynamics [1][10] - **Government Response**: While the government is aware of the CRE situation, no comprehensive strategy has been implemented yet [1][16] Investment Recommendations - Top picks in the sector include: - **Swire Properties**: Improving China retail and potential buyback - **Link REIT**: Improving HK retail and Stock Connect - **Wharf REIC**: Stabilizing HK discretionary retail - **Henderson Land**: Stabilizing HK residential market with high yield [1][5] This summary encapsulates the key insights and forecasts regarding the Hong Kong property sector as discussed in the expert meeting, highlighting potential investment opportunities and risks.

Group 1: Market Overview - The report highlights that despite uncertainties in the Singapore real estate market, there are positive factors supporting its development [1][2] - Global economic conditions and geopolitical tensions are identified as significant external challenges impacting the market [2][9] - Singapore's position as a regional financial hub and government policies are seen as stabilizing factors for the real estate market [2][10] Group 2: Economic Outlook - Singapore's GDP growth is projected to decelerate to 1-3% in 2025, down from 4.0% in 2024 [5][9] - Inflation is expected to ease to 1.5-2.5% in 2025, following a decline from 4.8% in 2023 [5][19] - Interest rates in Singapore are anticipated to follow a downward trend, with projections suggesting a decrease to 3.75%-4.00% by the end of 2025 [5][21] Group 3: Office Market - The office market saw a net absorption of 1.91 million sq. ft. in 2024, the highest since 2017, driven by new Grade A office developments [28] - Vacancy rates for Core CBD (Grade A) offices decreased to 4.9% by the end of 2024, indicating a flight to quality among occupiers [30] - Core CBD (Grade A) rents are expected to grow modestly by around 2% in 2025, supported by limited supply and continued demand for high-quality spaces [39] Group 4: Industrial & Logistics Market - E-commerce and logistics sectors accounted for 39% of leasing demand in 2024, indicating resilience despite challenges [46] - An estimated 4.92 million sq. ft. of logistics supply is expected in 2025, which is about 3.9% of existing warehouse stock [53] - Average prime logistics rents rose by 1.1% to $1.87 psf per month in 2024, with expectations of stability in 2025 [54] Group 5: Retail Market - Tourism recovery is projected to continue in 2025, with visitor numbers expected to rise due to new attractions and events [62][63] - Approximately 0.50 million sq. ft. of retail space is expected to complete in 2025, significantly lower than previous years, which should support retail rents [70] - Overall average retail prime rents are expected to grow by 2-3% in 2025, recovering to pre-pandemic levels [74]