Morgan Stanley: Hong Kong property prices rise next year

The Central Plains City Leading Index rose 24% yoy in June, then narrowed to 17% in September, believing that property prices growth in Hong Kong has peaked and expected to grow in the future. Will be further slowed down to the end of next year to slow down to zero, real estate stocks or will be under pressure. Morgan Stanley also pointed out that property prices in Hong Kong fell 5% to 10% this year, with overall office rents and 5% for shop rents.

This year the retail rents fell 5%

Morgan Stanley believes that the Hong Kong Interbank Offered Rate (HIBOR) will catch up with the LIBOR level, the completion of more private residential flats and the recent Mainland capital controls, which are putting pressure on the average property prices in Hong Kong. Although property prices are slowing down year-on-year, property prices are temporarily at current levels due to factors such as economic growth better than expected, low unemployment and stock market boom. The report notes that developers’ 4% to 5% growth in mortgages and local wages will help maintain Hong Kong’s affordability.

Real estate stocks, the Morgan Stanley New World (0017) rating “overweight", because it has more land reserves in the Mainland, and the New World Center reconstruction project will be completed. Hoshi Industries (0014) has also been upgraded to “compete with the market", which is due to the improvement in retail properties in Hong Kong, and it is believed that it will have a more stable rental income.

Raise New World Ratings to “Overweight"

and Cheung Kong , which are supported by the new land and the development and stabilization of the Dafa District, which are re-revalued in the Mainland.