Bocom Intl released a research report stating that it is expected that the overall property buying sentiment in the domestic real estate market will continue to moderately recover in 2025, with the industry fundamentals showing some improvement; the reduction in first-hand market supply will alleviate the pressure for property developers to lower prices, and first-hand property prices are expected to stabilize at the current level, believing that next year's transaction volume is expected to increase by 15% year-on-year. The bank pointed out that it is paying attention to the market stabilization, and if the sales trend in October continues until after the Lunar New Year next year, it will help more real estate enterprises to "stop falling and stabilize" financially and fundamentally. The bank outlined its preference ranking, starting with state-owned enterprises with low valuations or a background in state-owned enterprises, followed by leading private enterprises with land reserves in first and second-tier cities, and finally other private property developers.
Regarding Hong Kong's real estate, the bank forecasts a 5% increase in residential rents next year, and a 3% to 5% increase in prices for medium and small-sized units. In addition, the trend of mainland visitors traveling to Hong Kong is gradually stabilizing, with expectations of a moderate recovery in the retail market. At the same time, it is also believed that the worst situation for office buildings has passed, but the vacancy rate remains high, limiting the rebound space of the office market, with the prime office rents in major business districts expected to decline by about 3% to 5% next year.
The bank pointed out that interest rate cuts are a positive potential catalyst in the next 12 to 18 months, and the possible inclusion of REITs in the Stock Connect will be another catalyst for industry reassessment in the short term. The bank listed Link REIT (00823.HK) as its top choice in the industry, preferring retail real estate investment trusts, followed by low-debt residential developers, then retail landlords, and finally real estate investment trust funds, owners, and developers with a large amount of office business.
