According to the APP of Zhitong Finance, UBS issued a research report that downgraded Wharf Real Estate Investment (01997) from "neutral" to "sell" and reduced its target price by 13% from HK $46 to HK $40.

As retail in Hong Kong, China is not expected to return to pre-epidemic levels until 2025, it will take time for tourists to recover, while the transformation of luxury retail in the mainland will also eat into tourism consumption, the report said. Under the reduced rental size of luxury tenants, the company is expected to face higher competition because the rent is higher than the market level. According to the bank's visit to Harbour City and Times Square in early July, 16% and 18% of the shops in the two shopping malls are still vacant, and the vacant shops have been converted into coupon exchange centres and short-term exhibition space, so the actual income rental rate may be lower than at the end of last year.

The bank said it believed the current high rental costs were unsustainable and would be offset by a modest retail recovery. At the same time, as more luxury brands are entering the Greater Bay area, it is expected that the relevant brands may reduce their presence in Hong Kong, Harbour City will face greater competition from K11MUSEA in the same area, and Times Square is also at risk of being downgraded to a people's livelihood mall.