GLONGHUI, Oct. 24 | UBS published a report that lowered the Hong Kong property price forecast from a 5% rise to a flat rate rise of 5% this year, and expects a drop of more than 10% next year to reflect the high risk of debt among small and medium-sized developers and the high interest rate environment for a longer period of time. The bank estimates that from this year to next year, office rents will drop by 3% to 5%. Amid oversupply, the vacancy rate will rise further. Since the beginning of the year, retail sales in Hong Kong have increased by more than 19%, but are estimated to slow significantly next year, mainly due to weak consumption by mainland tourists and local residents. Residential property prices will not recover significantly until the Fed starts cutting interest rates. The bank selectively favors property developers over retail and office property companies. According to the report, real estate developers' current prices are discounted by 58% compared to net asset value (NAV), close to 61% of the 1998 low, maintaining Henghe's “buy” rating. The conversion of agricultural land mainly benefiting from them is progressing rapidly, yet the relevant factors are not reflected in the stock price. The credit rating was raised from “neutral” to “buy”, mainly due to strong net cash on hand, equivalent to 60% of market value. SHKP's rating was downgraded from “buy” to “neutral,” and Changshi Group remains “neutral,” mainly because the dividend per share may disappoint the market, and the dividend rate is not attractive.