Core Viewpoint - Morgan Stanley and experts from Meilian Group believe that Hong Kong's housing prices may have bottomed out due to limited supply, declining mortgage rates, and increased contributions from mainland buyers [1] Demand Aspects - In the first half of 2025, overall transaction volume (both new and second-hand units) increased by 3.9% year-on-year, reaching 29,000 units, driven by the decline in Hibor since May 2025, competitive pricing strategies from developers, and increased contributions from mainland buyers [2] - The relaxation of stamp duty in the 2025/26 budget (only HKD 100) led to a 305% year-on-year surge in sales of properties priced at HKD 10 million and below in the first half of 2025 [2] - The mass market is expected to continue outperforming the luxury market, with Meilian forecasting 18,000 sales of new units in 2025, a 6% year-on-year increase [2] Supply Improvement - Potential supply has peaked, with limited land supply and a decrease in new project completions, indicating the market may enter an upward cycle [3] - In the first five months, completed inventory accounted for over 55% of total sales of new units, compared to approximately 40% in the 2023/24 fiscal year, prompting developers to clear inventory [3] - The discount on new unit prices has narrowed from 12% to 9%, indicating improved demand [3] - The absorption rate for new units improved to 64% in the first half of 2025, compared to 57% in 2024 and 50% in 2023 [3] Price Trends - Housing prices may have stabilized in the first half of 2025, with a year-on-year decline of 1%, which is less than expected, aligning with Morgan Stanley's positive outlook [4] - Meilian expects housing prices to rise by 3% in 2025, while Morgan Stanley estimates a 2% increase for the second half of the year, with catalysts potentially emerging when supply drops below 90,000 units [4] Rental Trends - The rental market remains positive, supported by an influx of talent and students from mainland China coming to Hong Kong [5] - Local demand has been suppressed in the past 2-3 years due to rising mortgage rates and falling housing prices, but this trend may change as local residents may shift from renting to buying [5] - Meilian forecasts a 6% year-on-year increase in rental prices for 2025, with a 1.2% increase in the first half of 2025 [5]

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]

Group 1: Residential Market Outlook - The chairman of JLL Hong Kong, Zeng Huanping, predicts a 5% decline in small to medium-sized residential prices this year, driven by an increase in non-local professionals and students [1] - Residential rents are expected to reach historical highs due to the influx of non-local talent and students [1] - The forecast for luxury property prices has been adjusted from a 5% decline to a range of 5% to 10% due to an increase in distressed sales of commercial properties affecting luxury homeowners [1] Group 2: Commercial Property Market Outlook - The office market is showing signs of improvement, with increased leasing activity in prime locations, particularly in Central, despite an overall vacancy rate rising to 13.6% [1] - The net absorption recorded in the first half of the year was 130,700 square feet, driven by transactions in key areas like Central, Wan Chai/Causeway Bay, and Tsim Sha Tsui [1] - JLL anticipates that rental rates for prime office buildings in Central will stabilize by the end of the year, although overall office rents are expected to decline by about 5% for the year [2] Group 3: Retail Market Outlook - The vacancy rate for core area street shops remains at 10.5%, while the vacancy rate for premium shopping malls has reached a new high of 10.5% due to increased new supply and additional vacant space in existing malls [2] - The upcoming completion of approximately 600,000 square feet of new retail space is expected to exert upward pressure on vacancy rates for premium shopping malls [2] - Rental rates for core area street shops and premium malls are projected to decline by 5% to 10% this year [2]

Group 1: Overall Market Sentiment - The Hong Kong property market remains cautious in the first half of 2025, with no significant measures introduced in the latest government budget [1] - Recent reductions in actual mortgage interest rates and increased cash rebates from banks have slightly improved the residential market sentiment, although the non-residential property market continues to be affected by investor sell-offs [1][2] Group 2: New Property Sales and Inventory - The high inventory issue of new properties persists, with expected lower transaction volumes in 2025 compared to 2024 due to the high base effect from government measures [2] - Approximately 20,900 and 20,100 residential units are projected to be completed in 2025 and 2026, respectively, while the total first-hand transaction volume for 2024 is estimated at around 16,900 units [2] Group 3: Secondary Market Dynamics - The secondary market is stabilizing as some buyers enter due to a 30% drop in prices from previous peaks, lower interest rates, and government stamp duty relaxations, but prices remain influenced by the primary market [2] - The residential rental market is benefiting from increased demand from international students and skilled professionals, leading to a positive trend in overall rental prices [2] Group 4: Luxury and Commercial Property Market - The luxury market shows signs of demand absorption with nearly 1,000 transactions for large units in the first five months of 2025, supported by mainland buyers due to the government's investment immigration policy [3] - The overall commercial property market remains weak, with low-priced transactions and rising yields affecting property appreciation potential, although a slight improvement in the office market is expected in the second half of 2025 [4] Group 5: Student Accommodation Opportunities - The severe supply-demand imbalance in student accommodation presents an opportunity to convert underutilized commercial properties into student housing, supported by a pilot program from the Hong Kong Development Bureau and Education Bureau [4]

Core Viewpoint - Morgan Stanley suggests that the Hong Kong residential market may be entering an upward cycle after seven consecutive years of decline, with property prices having adjusted nearly 30% from their historical peak in August 2021 [1] Market Analysis - The report indicates that the potential upward cycle could last for 4 to 5 years, driven by factors such as the Central CCL lagging behind the Hang Seng Index, wage growth improving affordability to 2010 levels, structural benefits like low land supply and the removal of additional stamp duties, and low interest rates [1] Price Forecast - It is anticipated that property prices will increase by 2% in the second half of the year [1] Stock Selection - Morgan Stanley favors stocks such as New World Development (00016.HK), Henderson Land (00012.HK), and Kerry Properties (00683.HK) as they are expected to benefit significantly from the reduction in Hong Kong Interbank Offered Rate (HIBOR) and possess ample saleable resources [1] - The rating for Henderson Land has been upgraded from "Market Perform" to "Overweight," while the rating for Sino Land (00083.HK) has been downgraded from "Overweight" to "Market Perform" [1]

Core Viewpoint - Morgan Stanley analysts, led by Praveen Choudhary, suggest that Hong Kong property prices are likely to rebound from a bottom due to an influx of mainland buyers, improvements in capital markets, and recent interest rate cuts [1] Group 1: Market Dynamics - The influx of mainland buyers is boosting the Hong Kong residential market [1] - Rental yields in Hong Kong have now surpassed those in major mainland cities, stimulating investment demand [1] - The recovery in capital markets is creating a wealth effect that further supports housing demand [1] Group 2: Economic Indicators - Analysts believe that the current phase may still be early, but there are several optimistic indicators suggesting the beginning of an upward cycle [1] - This upward cycle is expected to last for four to five years [1] - Lower interest rates are also expected to support the market [1]

Group 1 - The overall property transaction volume in Hong Kong for April 2025 reached 7,229 contracts, totaling HKD 501.08 billion, marking an increase of 8.5% in volume and 9.8% in value compared to March [1] - The residential property transactions recorded 5,694 contracts and HKD 421.97 billion in April, up 6.1% in volume and 8.7% in value from March, achieving the highest levels in five months [3] - The secondary residential market saw 3,830 transactions totaling HKD 292.6 billion in April, reflecting a significant increase of 29.9% in volume and 34.0% in value compared to March, reaching a new high in 12 months [4] Group 2 - The increase in property transactions is attributed to the easing of stamp duty regulations, which has positively influenced market sentiment, leading to a 67.8% rise in overall registration volume over two months [1] - The first-hand private residential market experienced a decline in April, with 1,598 transactions and HKD 136.2 billion, down 28.1% in volume and 16.8% in value from March, indicating a slowdown in new project sales [3] - The market is expected to face challenges in May, with projections indicating a drop in registration numbers to around 5,000, a decrease of approximately 30% from April [1]