M Stanley Forecasts 3% Drop in Office Rental Rates This Year, Favors Office Sector Over Retail for Homebuilders
Hong Kong Office Market Trends: Morgan Stanley reports a preference for office spaces over retail, with improving vacancy rates in Central District, which is expected to see a 3% rental rate increase by 2026.
Investment Recommendations: The report favors Hongkong Land and HYSAN DEV for office investments, while advising against WHARF REIC due to market share and tenant retention risks.
Retail Sector Insights: In retail, Chinese luxury brands are preferred over Hong Kong retailers, with HANG LUNG PPT being highlighted as a better investment option.
Market Activity: Notable short selling activity was observed in various stocks, with significant ratios for WHARF REIC and LINK REIT, indicating investor caution in the current market environment.
Trade with 70% Backtested Accuracy
Analyst Views on 00014
About the author
Citi Anticipates Increased EPS Growth for HK Developers in 2026-2027, Suggests SHK PPT, SINO LAND, and More
Citi Research Insights: Citi Research highlights that investors are focusing on the potential upside of the Hong Kong real estate market for 2026-2027, despite last year's subdued performance, with a polarized rental outlook between luxury homes and office spaces.
Developer vs. Landlord Potential: The report suggests that developers may have greater earnings per share (EPS) upside compared to landlords, benefiting from improved profit margins and new land acquisitions.
Stock Recommendations: Recommended stocks include SHK PPT, SINO LAND, and HANG LUNG PPT, while UBS has made adjustments to its top picks, adding SINO LAND and removing HENDERSON LAND.
Dividend Outlook: The report indicates stable dividends for several companies, with SWIREPROPERTIES and Hongkong Land aiming for mid-single-digit growth, while LINK REIT and others may see a decrease in dividend per unit (DPU) due to negative rental growth.
Citi's Ratings and Target Prices for Hong Kong Developers (Table)
Stock Performance Overview: Various Hong Kong stocks showed mixed performance, with WHARF HOLDINGS and MTR CORPORATION experiencing slight gains, while HENDERSON LAND and NEW WORLD DEV saw declines.
Short Selling Data: Significant short selling activity was noted across several stocks, with HENDERSON LAND leading at $77.95M and a ratio of 26.874%, indicating bearish sentiment among investors.
Analyst Ratings: Analysts have mixed ratings for the stocks, with HYSAN DEV and SHK PPT receiving "Buy" ratings, while WHARF HOLDINGS and NEW WORLD DEV are rated as "Sell."
Market Predictions: CLSA predicts a 5% rise in Hong Kong home prices this year, favoring Hysan and Link REIT as preferred investments.
Citi Research: Optimistic Investor Attitude Towards Hong Kong Real Estate, Prefers SHK PPT and HANG LUNG PPT
Investor Sentiment: Citi's research shows positive sentiment towards Hong Kong real estate, with a preference for property developers and Central office over luxury retail, while non-discretionary retail is underperforming.
Stock Performance: Investors favor SHK PPT, with notable short selling activity in Hongkong Land, HANG LUNG PPT, and SWIREPROPERTIES, indicating mixed confidence in these stocks.
Divided Opinions: There are varied opinions on SINO LAND, HENDERSON LAND, and HYSAN DEV, with some stocks receiving underweight targets, including LINK REIT and WHARF REIC.
Limited Discussion: Other developers like CK ASSET and KERRY PPT have limited discussion, with varying short selling ratios reflecting differing investor confidence.
<Research>CLSA Forecasts 5% Increase in Hong Kong Property Prices This Year, Favors Hysan and Link
Hong Kong Home Prices Recovery: Hong Kong home prices are recovering, with optimistic market sentiment leading to increased developer stock prices; however, price growth is expected to be moderate due to stable mortgage rates and diminishing expectations for interest rate cuts.
Sierra Sea Phase 2A Sales Success: SHK PPT's Sierra Sea Phase 2A saw over 49,000 applications, making it oversubscribed by more than 214 times, with average prices per square foot rising compared to previous phases, although the increase is less than the overall market rise.
UBS Report on Retail Rents: UBS has set a target price of $42 for LINK REIT, indicating ongoing pressure on Hong Kong retail rents, which may impact the broader property market.
CLSA's Growth Forecast: CLSA forecasts a 5% growth in Hong Kong home prices by 2026, with HYSAN DEV and LINK REIT identified as top stock picks, both rated as Outperform.
Citi's Projections for Ratings, Target Prices, and Valuations of HK Real Estate Stocks (Table)
Stock Performance: Various Hong Kong stocks showed mixed performance, with some companies like Henderson Land and Hysan Development experiencing gains, while others like Wharf REIC and Champion REIT saw declines.
Short Selling Data: Significant short selling activity was noted across multiple stocks, with SHK PPT and Wharf Holdings having the highest short selling ratios, indicating bearish sentiment among investors.
Investment Ratings: Analysts provided investment ratings, recommending buys for several stocks including Hysan Development and Sino Land, while suggesting sells for Wharf Holdings and New World Development.
Discount to NAV: Many stocks are trading at substantial discounts to their net asset values (NAV), with Kerry Properties and Hang Lung Properties showing the largest discounts at 74% and 68%, respectively.
<M Stanley Analysis: Ratings and Target Prices for Hong Kong Developers (Table)>
LINK REIT Performance: LINK REIT shares fell by 0.87%, with a short selling ratio of 13.779% and a downgrade in rating from Overweight to Equalweight, with target price reduced from HK$48 to HK$37.
HANG LUNG PPT Update: HANG LUNG PPT shares increased by 2.894%, maintaining an Overweight rating with a slight target price increase from HK$10.5 to HK$10.7.
SWIRE PROPERTIES Rating Change: SWIRE PROPERTIES shares rose by 0.959%, with a rating upgrade from Equalweight to Overweight and a target price increase from HK$20 to HK$23.
WHARF REIC Decline: WHARF REIC shares decreased by 0.904%, maintaining an Underweight rating with a target price adjustment from HK$22.5 to HK$23.
Citi Anticipates Increased EPS Growth for HK Developers in 2026-2027, Suggests SHK PPT, SINO LAND, and More
Citi Research Insights: Citi Research highlights that investors are focusing on the potential upside of the Hong Kong real estate market for 2026-2027, despite last year's subdued performance, with a polarized rental outlook between luxury homes and office spaces.
Developer vs. Landlord Potential: The report suggests that developers may have greater earnings per share (EPS) upside compared to landlords, benefiting from improved profit margins and new land acquisitions.
Stock Recommendations: Recommended stocks include SHK PPT, SINO LAND, and HANG LUNG PPT, while UBS has made adjustments to its top picks, adding SINO LAND and removing HENDERSON LAND.
Dividend Outlook: The report indicates stable dividends for several companies, with SWIREPROPERTIES and Hongkong Land aiming for mid-single-digit growth, while LINK REIT and others may see a decrease in dividend per unit (DPU) due to negative rental growth.
Citi's Ratings and Target Prices for Hong Kong Developers (Table)
Stock Performance Overview: Various Hong Kong stocks showed mixed performance, with WHARF HOLDINGS and MTR CORPORATION experiencing slight gains, while HENDERSON LAND and NEW WORLD DEV saw declines.
Short Selling Data: Significant short selling activity was noted across several stocks, with HENDERSON LAND leading at $77.95M and a ratio of 26.874%, indicating bearish sentiment among investors.
Analyst Ratings: Analysts have mixed ratings for the stocks, with HYSAN DEV and SHK PPT receiving "Buy" ratings, while WHARF HOLDINGS and NEW WORLD DEV are rated as "Sell."
Market Predictions: CLSA predicts a 5% rise in Hong Kong home prices this year, favoring Hysan and Link REIT as preferred investments.
Citi Research: Optimistic Investor Attitude Towards Hong Kong Real Estate, Prefers SHK PPT and HANG LUNG PPT
Investor Sentiment: Citi's research shows positive sentiment towards Hong Kong real estate, with a preference for property developers and Central office over luxury retail, while non-discretionary retail is underperforming.
Stock Performance: Investors favor SHK PPT, with notable short selling activity in Hongkong Land, HANG LUNG PPT, and SWIREPROPERTIES, indicating mixed confidence in these stocks.
Divided Opinions: There are varied opinions on SINO LAND, HENDERSON LAND, and HYSAN DEV, with some stocks receiving underweight targets, including LINK REIT and WHARF REIC.
Limited Discussion: Other developers like CK ASSET and KERRY PPT have limited discussion, with varying short selling ratios reflecting differing investor confidence.
<Research>CLSA Forecasts 5% Increase in Hong Kong Property Prices This Year, Favors Hysan and Link
Hong Kong Home Prices Recovery: Hong Kong home prices are recovering, with optimistic market sentiment leading to increased developer stock prices; however, price growth is expected to be moderate due to stable mortgage rates and diminishing expectations for interest rate cuts.
Sierra Sea Phase 2A Sales Success: SHK PPT's Sierra Sea Phase 2A saw over 49,000 applications, making it oversubscribed by more than 214 times, with average prices per square foot rising compared to previous phases, although the increase is less than the overall market rise.
UBS Report on Retail Rents: UBS has set a target price of $42 for LINK REIT, indicating ongoing pressure on Hong Kong retail rents, which may impact the broader property market.
CLSA's Growth Forecast: CLSA forecasts a 5% growth in Hong Kong home prices by 2026, with HYSAN DEV and LINK REIT identified as top stock picks, both rated as Outperform.
Citi's Projections for Ratings, Target Prices, and Valuations of HK Real Estate Stocks (Table)
Stock Performance: Various Hong Kong stocks showed mixed performance, with some companies like Henderson Land and Hysan Development experiencing gains, while others like Wharf REIC and Champion REIT saw declines.
Short Selling Data: Significant short selling activity was noted across multiple stocks, with SHK PPT and Wharf Holdings having the highest short selling ratios, indicating bearish sentiment among investors.
Investment Ratings: Analysts provided investment ratings, recommending buys for several stocks including Hysan Development and Sino Land, while suggesting sells for Wharf Holdings and New World Development.
Discount to NAV: Many stocks are trading at substantial discounts to their net asset values (NAV), with Kerry Properties and Hang Lung Properties showing the largest discounts at 74% and 68%, respectively.
<M Stanley Analysis: Ratings and Target Prices for Hong Kong Developers (Table)>
LINK REIT Performance: LINK REIT shares fell by 0.87%, with a short selling ratio of 13.779% and a downgrade in rating from Overweight to Equalweight, with target price reduced from HK$48 to HK$37.
HANG LUNG PPT Update: HANG LUNG PPT shares increased by 2.894%, maintaining an Overweight rating with a slight target price increase from HK$10.5 to HK$10.7.
SWIRE PROPERTIES Rating Change: SWIRE PROPERTIES shares rose by 0.959%, with a rating upgrade from Equalweight to Overweight and a target price increase from HK$20 to HK$23.
WHARF REIC Decline: WHARF REIC shares decreased by 0.904%, maintaining an Underweight rating with a target price adjustment from HK$22.5 to HK$23.
