Hong Kong Property Sector _Five key investment themes in 2025__

Summary of Hong Kong Property Sector Research Industry Overview - Industry: Hong Kong Property Sector - Research Firm: UBS Investment Research - Date: January 2025 Key Investment Themes for 2025 1. RMB Depreciation: Expected negative impact on several companies, with scores ranging from -1 to -1 for most developers [3][3][3] 2. Capital Recycling: Positive outlook for companies like Kerry and Henderson, both scoring 1, indicating potential for share buybacks and other corporate actions [3][3][3] 3. Corporate Actions: Companies like Sino and Swire are expected to engage in corporate actions, scoring 1, indicating a proactive approach [3][3][3] 4. Sustainable Dividend Yield: Companies like Kerry, Henderson, and Sino are expected to maintain sustainable dividend yields, scoring 1, while others like Wharf and Hysan show negative scores [3][3][3] 5. Benefiting from HK Residential Policy Support: Most developers are expected to benefit from supportive policies, scoring positively [3][3][3] Company Ratings and Price Targets - Top Rated Companies: - Kerry Properties (Ticker: 0683.HK) - Buy, Price Target: HK$19.00, 26% upside - Henderson Land (Ticker: 0012.HK) - Buy, Price Target: HK$26.00, 16% upside - Sino Land (Ticker: 0083.HK) - Buy, Price Target: HK$10.50, 37% upside - SHKP (Ticker: 0016.HK) - Buy, Price Target: HK$90.00, 26% upside - Least Preferred Companies: - CK Asset (Ticker: 1113.HK) - Neutral, Price Target: HK$31.00, -2% downside - Wharf (Ticker: 0004.HK) - Sell, Price Target: HK$16.30, -25% downside [3][3][3] Market Forecasts - Residential Market: Expected to remain flat in 2025, with a cyclical downturn noted since 2022 due to rate hikes [9][10] - Rental Trends: Residential rent increased by 6% YoY in November 2024, indicating a recovery trend [14][14] - Mortgage Rates: Anticipated decline in HK new mortgage rates to 3.25% by end-2025 if the US Fed lowers rates [16][16] Economic Indicators - Time Deposits: HK$4 trillion in time deposits could be gradually released, impacting liquidity in the property market [19][19] - Population Growth: Strong inflow of talent expected to drive HK's population to over 8 million by 2030 [28][28] Additional Insights - Mainland Buyers: Interest from mainland buyers in HK properties is at a historical high, with children's education being a significant factor in purchasing decisions [44][44] - Preferred Districts: Wanchai, Kowloon City, and Central & Western are among the most preferred districts for property purchases [52][52] Conclusion The Hong Kong property sector is navigating a complex landscape with potential for recovery driven by supportive policies and demographic trends. Key players are positioned to capitalize on these trends, although challenges remain due to economic conditions and interest rate fluctuations.