Investment Rating - The report maintains an "Overweight" rating for the real estate development sector and an "Overweight" rating for real estate services [1][6]. Core Insights - The Hong Kong private residential market experienced a rise in both transaction volume and prices in June, with private residential prices increasing for three consecutive months [1][2]. - The report highlights that the market is expected to improve due to factors such as potential appreciation of the Renminbi, spillover effects from the Hong Kong stock market, and a rebound in population [1][2]. - The report suggests that the local developers and commercial operators in Hong Kong are likely to see valuation recovery, particularly companies with ample land reserves and quality commercial assets along the MTR lines [1][6]. Summary by Sections Market Performance - In June, the number of new private residential transactions reached 2,140, up 28% month-on-month, while second-hand transactions totaled 3,605, up 11% month-on-month [1]. - For the first half of the year, new private residential transactions totaled 9,280, down 1.4% year-on-year, while second-hand transactions increased by 8.3% year-on-year to 18,452 [1][2]. Price Trends - The Hong Kong private residential price index stood at 286.7 in June, reflecting a month-on-month increase of 0.03%, marking three consecutive months of price increases [2]. - Rental prices also showed an upward trend, with the rental index rising by 0.31% month-on-month in June, continuing a seven-month streak of increases [2]. Interest Rates and Market Conditions - The one-month HIBOR averaged 0.68% in June, down 78 basis points from May, indicating a significant easing of the high-interest rate pressure that previously suppressed market demand [3]. - The report notes that the "supply exceeds demand" phenomenon continues, creating favorable conditions for first-time homebuyers [3]. Recommendations - The report recommends focusing on MTR Corporation (66 HK) and Link REIT (823 HK), with target prices of HKD 31.90 and HKD 50.59 respectively, both rated as "Overweight" and "Buy" [6][18].

Group 1 - The core viewpoint of the article indicates a significant increase in Hong Kong's property market activity expected around March-April 2025, with a slight rise in the property price index observed in April-May 2025, leading banks to adopt a more positive stance on mortgage business [1] - The property price index from Midland Realty hit a low of 126.3 points in March and slightly rebounded to 127.5 points by the last week reported [1] - Factors contributing to the rebound in property prices include a "super rebound" from previous rapid declines, optimistic expectations regarding economic recovery, and a decrease in mortgage interest rates encouraging buyers to enter the market [1] Group 2 - Recent market activity shows that small and medium-sized unit buyers, along with first-time buyers, dominate the market, with popular unit prices ranging from 6 million to 7 million HKD, while units priced over 10 million HKD are experiencing lower liquidity [2] - The Hong Kong government's changes to the stamp duty policy, raising the threshold from 3 million HKD to 4 million HKD, have significantly impacted transaction volumes, with over 1,000 registrations for second-hand residential properties priced between 3 million and 4 million HKD in April, marking a new high since November 2016 [2] - The talent recruitment initiatives by the Hong Kong government have led to a reversal in the declining trend of the labor population since 2020, with 196,000 individuals arriving in Hong Kong as part of these measures [2] Group 3 - The company expresses a cautiously optimistic outlook for Hong Kong's property prices, predicting 45,000 new residential mortgage applications in 2025, ending a three-year decline since 2021, with existing home mortgages expected to rise by 10% to 55,500 applications [3] - The forecast for pre-sale mortgages is set at 6,500, representing a 55% increase compared to 2024, potentially reaching a five-year high [3] - However, uncertainties in geopolitical conditions and a high supply of new units, with approximately 24,000 units expected to be completed this year and nearly 100,000 over the next four years, may influence future price trends [3]

Core Viewpoint - The Hong Kong real estate market is at a critical stage of bottoming out and recovering, driven by the global de-dollarization process and multiple favorable factors [1][3]. Group 1: Market Trends - The report indicates that the residential market's transaction volume and price are expected to stabilize first, while commercial assets may benefit from improved consumption and rental recovery [1]. - Historical analysis shows that the stock market often leads the real estate market, with private residential transaction volume typically lagging behind stock market turning points by 5 to 7 months, and price changes lagging by 8 to 11 months [3]. - Since September 2024, the Hang Seng Index has increased by 33%, which may significantly drive the current real estate recovery [3]. Group 2: Market Forecast - In 2024, under comprehensive policy easing, private residential transaction volume and value in Hong Kong are projected to grow by 25% and 18% year-on-year, reaching a three-year high [3]. - Despite challenges such as high interest rates and a prolonged inventory clearance period exceeding 20 months, the rapid decline in HIBOR since early May has eased liquidity constraints, laying a foundation for market recovery [3][4]. Group 3: Positive Factors - Several positive factors are expected to support market improvement: - The appreciation of the Renminbi against the Hong Kong dollar is likely to enhance asset revaluation and attract mainland capital into real estate [4]. - Increased activity in the Hong Kong stock market is expected to boost local consumption and housing demand [4]. - An improved interest rate environment, characterized by a negative correlation between HIBOR and housing prices, is anticipated to enhance the attractiveness of real estate investments [4]. - Population inflow due to immigration policies is expected to support potential housing demand [4]. - There remains policy space for further optimization in areas such as mortgages and taxes [4]. Group 4: Long-term Outlook - The Hong Kong real estate market is expected to gradually stabilize by the second half of 2025, with projected year-on-year growth rates for private residential transaction volume of 3% and 5% in 2025 and 2026, respectively, and a potential price increase of 3% in 2026 [4].