Goldman Sachs: Raises Hong Kong property price growth forecast for the year to 12%, upgrading Henderson Land (00012) and Sino Land (00083) ratings to "buy".

Goldman Sachs released a research report stating that it has raised its forecast for this year's property price increase from 5% to 12%, expecting that government visa and immigration policies will drive demand. In addition, strong rental growth (accumulating about 20% from 2023 to 2025), coupled with decreasing mortgage rates, may lead more people to "rent to buy." Since the easing of stamp duty at the beginning of the 2024 fiscal year, trading costs have significantly decreased, which may also stimulate investment demand. The bank believes that future government policies will continue to support population growth, income growth, and housing affordability. Benefiting from the active capital market, the bank expects a 3% year-on-year increase in office rental in the core Central business district this year, while other areas are expected to remain stable. However, the bank is more cautious about the retail market outlook, expecting only a moderate 2% rental growth due to ongoing competition from Hong Kong residents' overseas travel and online shopping. In terms of stocks, the bank has upgraded HENDERSON LAND (00012) and SINO LAND (00083) from "sell" to "buy" and believes that both will benefit more from the upward cycle of the Hong Kong residential market, with target prices raised to 39 Hong Kong dollars and 14.6 Hong Kong dollars respectively. It also maintains its "buy" rating on SHK PPT (00016) with a target price raised to 159 Hong Kong dollars; these three companies account for about 36% of the market's total stock and have different new projects in progress. Additionally, the bank has downgraded CK ASSET (01113) from "buy" to "neutral" due to its smaller exposure to the Hong Kong property market, with the target price raised to 53 Hong Kong dollars. On the other hand, the bank downgraded WHARF REIC (01997) from "buy" to "sell" and downgraded LINK REIT (00823) from "buy" to "neutral" because of their significant exposure to the retail industry and specific company-level issues or other structural challenges; target prices have been lowered to 28 Hong Kong dollars and 41.3 Hong Kong dollars respectively. Finally, the bank downgraded MTR CORPORATION (00066) from "neutral" to "sell" and raised the target price to 36.1 Hong Kong dollars.