Core Viewpoint - Morgan Stanley has upgraded its industry outlook for Hong Kong's real estate to "attractive," expecting positive year-on-year growth in three segments: residential property prices, Central office rents, and retail sales for the first time since 2018 [1][2]. Residential Sector - The firm is most optimistic about the residential market, predicting that property prices, which have fallen by 30% since 2018, will bottom out by 2025 and rise by 10% in 2026, with further increases expected in 2027 [1]. - The removal of stamp duties for foreign and mainland buyers in February 2024 is anticipated to boost property purchases from mainland clients [1]. - The influx of mainland immigrants, which has doubled to 140,000 annually post-pandemic compared to 70,000 from 2012 to 2019, is contributing to positive population growth [1]. - A strong stock market performance, with the Hang Seng Index rising by 28% in 2025, has also improved market sentiment [1]. Office Sector - Despite high vacancy rates, the market is expected to recover, with Central office rents projected to increase by 3% this year due to rising demand for quality office properties from asset management firms, hedge funds, and wealth management institutions [2]. - Recent large transactions, pre-leasing activities, and increased trading volumes in the IPO market are seen as positive indicators for the office sector [2]. Retail Sector - Retail sales in Hong Kong are expected to grow by 3% year-on-year this year, driven primarily by an increase in visitor numbers [2]. - However, there are concerns regarding the ongoing rise in online retail sales and competition from lower-priced products and services in Shenzhen, which pose challenges to the retail market [2]. - The expansion of duty-free sales in mainland China is also viewed as a potential pressure point for Hong Kong's retail sector [2].

Core Viewpoint - JD Group is making a significant investment in Hong Kong by acquiring a 50% stake in the SPL property, indicating a deepening strategic commitment to the region [1][5] Group 1: Transaction Details - JD Group's subsidiary has agreed to sell all issued shares of Surearn Profits, which holds a 50% interest in the SPL property, for HKD 34.98 billion [1] - The SPL property is located at 3 Connaught Road Central, Hong Kong, and is a 27-story Grade A office building with a total area of approximately 229,200 square meters [1] - The transaction involves a clear payment structure, including a deposit at the signing of the agreement, a prepayment of buyer's loans, and a remaining payment upon completion, subject to certain conditions [3] Group 2: Strategic Context - This acquisition is part of JD Group's broader strategy to penetrate the Hong Kong market, which includes previous investments in community retail and high-end malls [3][4] - The purchase of the Central property not only meets JD's office space needs but may also serve as a future regional headquarters or technology research center, enhancing its synergy in the Greater Bay Area [3][4] Group 3: Market Positioning - JD Group's aggressive expansion in Hong Kong contrasts with the trend of foreign tech companies retracting from the Asian market, showcasing its confidence in the Chinese market and global vision [5] - The integration of retail, logistics, technology, and real estate resources positions JD Group as a leader in localizing e-commerce operations in Hong Kong [5]