Property prices in Hong Kong recorded double-digit declines last year. The outside world had expected the decline to continue this year. However, many major banks have recently changed their minds, believing that property prices have a chance to rebound this year.
UBS originally expected that property prices in Hong Kong would fall by 3% to rise by 3% this year, and adjusted to expect property prices to rise by 5% this year to reflect that the purchasing power of mainland professionals is more resilient than that of Hong Kong people; Professionals come to Hong Kong and believe that property prices in Hong Kong will rebound after bottoming out in the first quarter.
UBS, according to its UBS Evidence Institute data, shows that since the introduction of the stamp duty rebate measure, 68% of non-local professionals intend to buy properties. It is believed that as long as the market sentiment turns, currently about 340,000 non-local professionals will take action.
The bank believes that the government has launched a plan to attract talents, and the flow of local immigrants has stabilized and many professionals are expected to return. It is expected that the population of Hong Kong will re-emerge this year.
UBS also pointed out that it is optimistic about the real estate stocks whose share price is at a discount of 50% to the net asset value per share, and reiterated the "buy" rating for Henderson Land (0012) and SHKP (0016), and upgraded the rating of Kerry (0683) to "Buy" because of the significant discount to the stock price.
Hysan (0014) was also upgraded to "buy".
The retail industry in Hong Kong is expected to grow by 10% this year
UBS also pointed out that with the return of mainland tourists, the spending power of mainland tourists is stronger than that of local consumers. It is expected that local retail sales will record a 10% increase this year; it also expects that shopping malls in tourist areas will perform better than Minsheng shopping malls, so they prefer Hysan and SHKP .
However, it is bearish on the prospects of Wharf Real Estate (1997), the parent company of Harbor City, and believes that the market is too optimistic about the company's profit recovery prospects, and has not taken into account the company's high interest costs, sales of duty-free shops in the Mainland, and the narrowing of the luxury goods price gap between China and Hong Kong. shock.
However, UBS is cautious about the prospects of the office market, and expects office rents to fall by 3% this year.
The bank pointed out that even if the re-opening of China and Hong Kong will help boost the leasing market sentiment, the surge in new supply will push up the vacancy rate, and it is expected that when the office buildings in West Kowloon are completed in 2025, it may drive a new round of de-centralization.
Overall, UBS prefers Henderson Land, SHKP and Hysan, as residential and retail sales are expected to recover.