Furui stated that Hong Kong residential building sales data showed that the Hong Kong property market is recovering in the first half of the year, which is bullish for developers.
According to the report by Futong Finance App, Furui stated that Hong Kong residential building sales data showed that the Hong Kong property market is recovering in the first half of the year, which is bullish for developers. Even if there are more price cuts for new projects in the third quarter, strong rental activity will support asset yields and attract investment demand, which in turn helps sales. Therefore, the bank still prefers developer stocks to house rental companies, with New World Development (00016) and Sino Land (00083) being the first choices.
Furui expects that developers will continue to lower prices and promote sales in the third quarter, and some developers may postpone the launch of new projects to maintain the average profit margin. However, before the rate cut becomes more certain in the fourth quarter, the price promotion of new projects will inevitably affect the prices of second-hand properties. In terms of rent, rents continue to rise, with an average rental yield of about 3.4%. Rental activity is expected to remain strong in the third quarter, which may be conducive to the sales of new projects and overall buyer sentiment.
Furui stated that although there is uncertainty about the rate cut, the weakening of affordability should be cyclical, and the demand for the property market is still healthy, which will support future residential sales. The improvement of cash flow will bring surprises to developers. The bank expects that Sun Hung Kai Properties will increase its mid-term dividend, and its current valuation has largely reflected the pressure on profits. The bank is also bullish on the stable financial situation and dividend visibility of Sino Land, with a dividend yield of 7%.