Hong Kong Developers and Landlords
Expect the Strong Performance of the Stock Market to Have a Positive Impact on Property Prices
The CCL index fell by 7.71% in the first nine months of 2024 (9M24).
A 3% rebound in property prices is anticipated, supported by both rate cuts and China’s economic stimulus policies.
During the Golden Week holiday, the first six days saw a 24% year-on-year (yoy) growth in the number of mainland tourists, with F&B (Food and Beverage) being the primary beneficiary. However, the relatively high HKD exchange rate may continue to weigh on tourism spending.
Outlook and Recommendations
Maintain MARKET WEIGHT for Hong Kong developers and landlords.
Developers are preferred due to stronger expected performance.
Top picks:
Sun Hung Kai Properties (SHKP):
Target price raised to HK$103.00 from HK$94.55, with a projected FY25/26 dividend yield of 4.2%.
LINK REIT:
Target price is HK$45.05, benefiting from improvements in the F&B sector, with 30% of rental income contributed by F&B tenants.
Wharf (Holdings):
Target price: HK$32.80 (raised).
This corresponds to a projected 2025 dividend yield of 4.3%, down from the previous 5.0%. The yield spread over the 10-year US Treasury yield stands at 0.3%, equivalent to 0.75 standard deviation below the mean since 2020.
Hysan Development:
No specific target price mentioned in the given data, but it is generally aligned with the performance trends in developers and landlords.
Property Market Trends
Primary transactions are expected to increase to around 4,500 units in 4Q24, marking a 50% year-on-year rise. This will lead to an anticipated 3% rebound in property prices by year-end.
Tourism Impact
While mainland tourist numbers are growing, spending is expected to be lower due to the high HKD exchange rate.
Thank you
