Group 1 - UBS reports that the Hong Kong real estate sector is starting strong in 2026, with several stocks nearing historical highs [1] - The firm is adopting a more selective approach due to rising valuations, even for stocks with low price-to-book ratios [1] - Preferred stocks include Cheung Kong Property (00013), Sino Land (00083), and Kerry Properties (00683), which have relatively low debt-to-equity ratios and lower risks related to equity issuance [1] Group 2 - UBS believes the market has largely priced in positive factors for residential recovery, such as further interest rate cuts and an influx of talent and students from mainland China, but has not fully recognized the potential benefits of returning immigrants [2] - The firm forecasts over 10% growth in property prices over the next two years, supported by an estimated 321,000 Hong Kong residents applying for BNO visas, Taiwan residency, or Canadian student visas from 2020 to 2025 [2] - UBS anticipates a wave of returning immigrants this year, estimating that if 30% of the immigrant group returns, there will be an additional demand of 13,900 units by 2027, which represents 90% of the first-hand supply and 26% of the total supply [2]