Core Viewpoint - The Hong Kong private residential market is expected to stabilize and enter a growth phase over the next two to three years, driven by limited land supply, improved affordability due to falling prices and interest rates, and increased demand from mainland buyers [2][4][5]. Group 1: Private Residential Market - The private residential market is projected to experience a "volume and price increase" cycle, with total transaction volume and prices stabilizing by 2024-2025 [2][4]. - The market has shown signs of recovery after a four-year decline, with total transaction volume increasing by 70% from the low point in 1Q24, and first-hand residential transaction volume rising by 98% [4][6]. - The price of private residential properties is expected to achieve double-digit annual growth, with a significant rebound anticipated starting from July 2025 [2][27]. Group 2: Supply and Demand Dynamics - Supply constraints have been actively managed, with the actual supply of first-hand residential properties falling short of government targets, leading to a decrease in inventory levels [6][8]. - Demand has been bolstered by multiple factors, including a significant reduction in property prices (up to 30.4%), improved employment rates, and a decline in mortgage rates, which have dropped by 92 basis points to 3.25% [6][8]. - Policies aimed at attracting talent and investment have led to an increase in the number of mainland buyers, with their share in the second-hand market rising significantly since 2022 [8][21]. Group 3: Office and Retail Property Markets - The office market is still adjusting, with a high level of existing supply that needs time to be absorbed, particularly in core areas like Central and Admiralty [34][41]. - The retail property market is showing signs of structural recovery, driven by local economic factors and an increase in visitor numbers, although challenges remain due to online competition and changing consumer behavior [50][64]. - The retail sector is expected to see moderate growth in high-end markets and key projects catering to tourists, while community and non-core retail properties may continue to face pressure [64][66]. Group 4: Developer Insights - Private residential developers are recommended for investment due to their significant valuation discount and high exposure to the private residential market [3][4]. - Holding-type developers are seen as offering reasonable valuations, focusing on absolute return opportunities through profit growth and dividend yields [3][4]. - A sensitivity analysis framework has been established to assess the net asset valuations of major Hong Kong property companies based on future price increases and inventory replenishment rates [3][4].

Core Insights - The private residential property price index in Hong Kong reached 292.5 points in September 2025, reflecting a monthly increase of 1.3% and an annual increase of 1.59%, marking four consecutive months of growth with a cumulative rise of 2.1% [1] - In the first nine months of this year, property prices have increased by a cumulative 1.14%, while the current index is approximately 26.53% lower than the historical high of 398.1 points recorded in September 2021 [1] Price Index by Unit Type - The price index for small to medium-sized units (categories A, B, and C) stands at 294 points, with a monthly increase of 1.31% and an annual increase of 1.66% [1] - The price index for large units (categories D and E) is at 267 points, showing a monthly increase of 1.37% and an annual increase of 0.87% [1] Rental Market Performance - The private residential rental index reached 200 points in August this year, reflecting a monthly increase of 0.2% and marking the highest level in six years since August 2019, just 0.05% below the previous high of 200.1 points [1] - In the first nine months of this year, the rental index has cumulatively increased by 3.9% [1]

Group 1 - The core viewpoint indicates that the completion of private residential units in Hong Kong for Q1 reached 34% of the annual forecast of 20,862 units, with an estimated completion of around 20,000 to 21,000 units for the year, aligning closely with the forecast [1] - Major projects expected to obtain occupancy permits include "PARK SEASONS" (685 units), "SEASONS PLACE" (650 units), "柏珑III" (680 units), and "晓柏峰" (492 units) [1] - The latest data from the Hong Kong Buildings Department shows that in April 2025, there were 193 private residential units under construction, a 79% increase from 108 units in March 2025, although the actual pace of construction remains slow [1] Group 2 - In April, five private residential projects were completed in Hong Kong, with the largest being "Belgravia Place I" in Cheung Sha Wan, involving 714 units, followed by "亲海駅II期" in Yau Tong with 658 units [2] - In the first four months of the year, 16 projects in Kowloon accounted for 6,729 units completed, representing approximately 94.8% of the total, while only five projects in Hong Kong Island contributed 368 units, about 5.2% of the total [2] - No private residential projects were completed in the New Territories during the same period [2]