Goldman Sachs has released a research report indicating that while Hong Kong residential transaction volumes have softened over the past two to three months, property prices remain resilient, with a cumulative increase of approximately 12.5% since the start of the year. The firm maintains its forecast of a 15% rise in home prices for the full year.
The bank noted that Hong Kong residential transaction volumes have shifted from a 42% year-on-year increase in the first half of the year to a 26% decline in July and August, now stabilizing at lower levels. The recovery in the office market has begun to extend to non-core areas, including Admiralty and the eastern part of Hong Kong Island. Retail rents have stabilized since June but are still down 1.5% year-to-date, trailing the bank's full-year forecast of a 3% increase.
Addressing market concerns about the impact of higher U.S. interest rates on Hong Kong's property sector, Goldman Sachs believes market liquidity remains ample, with bank deposit balances growing about 10% year-on-year. The firm expects the pace of home price gains to moderate over the course of the year.
In terms of stock selection across property developers, landlords, banks, and financial institutions, Goldman Sachs highlights Henderson Land Development Co Ltd (ASX: HLD), Sun Hung Kai Properties Ltd (ASX: SUHJY), Swire Properties Ltd (ASX: SWP), HSBC Holdings (ASX: HSBC), Standard Chartered PLC (ASX: STAN), and Hong Kong Exchanges and Clearing Ltd (ASX: HKEX), while maintaining a positive view on Bank of China (Hong Kong) Ltd (ASX: BHKLY).
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