Nomura expected home prices in Hong Kong this year flat

Nomura released a research report, which is expected to see a drop of 25 basis points in rental yields of residential properties in Hong Kong by 2018 as ample capacity is completed and mortgage interest rates are likely to rise as the Federal Reserve increases interest rates. The bank believes that if the prime rate hike for the first time since 2008, it will not only affect new mortgages, but 90% of existing mortgages will also be affected.

The bank expects Chinese developers to grab land in Hong Kong will slow down in 2018, and the government will also take the initiative to provide new home supply. Overall, Nomura predicts that property prices in Hong Kong will remain flat this year.

In addition, Nomura holds a more positive view on the high-end retail market in 2018 in Hong Kong and believes that its performance will be better than that of the market for essential items. The decline in rental rents will be reduced and some rental units will benefit more from its unique catalysts.

Among the developers, Nomura prefers Cheung Kong (1113) and Sinosure (083), with the former maintaining a “Buy” rating, with the latter being raised from “Neutral” to “Buy”. In the rental segment, Hang Lung Properties (101 ) And Hysan (014) “Buy” rating, both of which are preferred by leasing units. In addition, the rating of Wharf (1997) was raised from “Neutral” to “Buy”.