Property Data Monitor_ Mainland China_ lack of direction in leading indicators; HK_ 2025 potential supply hits 36K units. Mon Jan 06 2025

Summary of the Conference Call Industry Overview - Industry: Real Estate in Mainland China and Hong Kong - Date: January 7, 2025 Key Points from Mainland China - Leading Indicators: - Centaline tier-1 city secondary asking price index dropped from 27 to 26, indicating potential for home prices to turn positive if the index exceeds 40 [4] - Centaline manager confidence index improved slightly from 53 to 54 [4] - Web traffic for agencies decreased by 1% week-over-week [4] - Sales Data: - 60-city weekly primary sales registrations fell by 39% week-over-week but increased by 54% year-over-year, largely due to holiday distortions [4] - Daily sales registrations in the first five days of January fell 15% year-over-year, 50% below the four-year average [4] - Weekly secondary sales registrations dropped by 19% week-over-week, but year-over-year growth improved from 51% to 74% [4] - Shenzhen outperformed with a 121% year-over-year increase, followed by Shanghai at 107% and Beijing at 61% [4] - Sector Performance: - Mainland China Property sector fell by 3% last week, underperforming the Hang Seng Index (HSI) which fell by 2% [4] - Distressed developers like Sunac and Shimao saw significant declines of 17% and 9% respectively [4] - State-owned enterprises (SOEs) like COLI and Greentown outperformed the market [4] - Expected underperformance of the sector until stronger policy expectations arise before the Two Sessions [4] Key Points from Hong Kong - Potential Supply: - Projected primary supply for 2025 is 36,000 units, consistent with 2024 levels [4] - Kai Tak is expected to contribute the most with 6,000 units, followed by Tseung Kwan O with 3,200 units [4] - Developers like Henderson and SHKP are expected to lead in launches with 6,300 and 5,000 units respectively [4] - Market Activity: - Weekend primary sales were muted at 23 units, a 32% decrease week-over-week, marking a four-month low [4] - Secondary transactions in the top 35 estates grew by 22% week-over-week but remained below the average of 50-70 units in Q4 2024 [4] - Secondary home prices rose by 0.4% week-over-week, while overall home prices fell by 6.5% in 2024, aligning with expectations of a 5-10% drop [4] - Mild downward pressure of 3-5% on home prices is anticipated over the next six months [4] - Sector Performance: - Hong Kong Property sector fell by 1% last week, outperforming the HSI [4] - Fortune REIT and Link REIT were the outperformers with increases of 2% and 1% respectively [4] - New World Development (NWD) underperformed with a 6% decline due to liquidity concerns [4] Additional Insights - Investment Recommendations: - Preferred stocks include CRL, COLI, and CR Mixc for potential buying on dips [4] - Caution advised on Vanke-H and NWD due to market conditions [4] - Analyst Contact Information: - Karl Chan, J.P. Morgan Securities (Asia Pacific) Limited [4] This summary encapsulates the critical insights from the conference call regarding the real estate market in Mainland China and Hong Kong, highlighting key indicators, sales data, sector performance, and investment recommendations.