Broker: UOB Kay Hian
Date of Report: 30 June 2025

China and Hong Kong Property Markets: Sales Slowdown, Policy Hopes, and Diverging Land Trends – Full Company Analysis and Outlook

Executive Summary: Navigating Weak Sales and Policy Anticipation

China’s property market is experiencing weakening sales momentum as of June 2025, raising anticipation for policy support at the upcoming July Politburo meeting. Meanwhile, Hong Kong’s property market shows signs of price stabilization, but the recent rebound in HIBOR (Hong Kong Interbank Offered Rate) poses a challenge to the recovery in property sales. UOB Kay Hian maintains a MARKET WEIGHT rating for both sectors, with a short-term preference for China property stocks.

Peer Comparison of Major Listed Property Companies

China Property Market: Weakening Sales and Land Market Divergence

New-Home Sales Trends

• June 2025 preliminary data for 28 monitored cities show new-home sales rising 7.6% month-on-month (mom), but declining 3.5% year-on-year (yoy).
• Tier 1 cities saw daily sales growth slow from +11.9% yoy in May to -9.4% yoy in June, highlighting weakening sentiment.
• Notable gains in Beijing (+31% yoy, +14% mom) and Wuhan (+69% yoy, +65% mom), while Guangzhou and Dongguan recorded declines both yoy and mom.

Secondary Home Market Activity

• Transactions in Tier 1 cities up 3.6% mom but down 9.0% yoy during the first 25 days of June.
• Tier 2 cities saw 8.7% mom growth and a modest 1.0% yoy gain, with Dongguan delivering the strongest yoy growth at 30%.

Detailed Sales Performance: Selected Cities

Lower Tier City Performance

• Dongguan and Foshan posted significant yoy contractions: -31% and -27% respectively.
• Jiangmen saw a dramatic 285% yoy increase, highlighting pockets of robust demand.

Land Market Divergence

• Core city land markets show a sharp split: non-core parcels in Hangzhou and Chengdu sold near reserve price, while core parcels in Jinan and Hangzhou saw premium rates as high as 55.9%.
• Expect further weakening in non-core land markets through Q3 2025.

Hong Kong Property Market: Price Stability Amid HIBOR Volatility

Rental and Price Index Trends

• Residential rental index rose 0.7% mom in May 2025, the largest increase in six months.
• Class B units (431–752sf) saw the largest rental growth, up 0.8% mom and 1.9% year-to-date, and the lowest vacancy rate at 3.8%.
• Overall rental index now sits just 2.4% below its August 2019 peak.

Signs of Price Stabilisation

• The RVD property index was stable in April and May 2025.
• Centaline’s CVI index has stayed above 50 for two consecutive weeks, indicating positive sentiment among major banks.
• Sun Hung Kai’s latest phase of NOVO Land launched with an ASP of HK\$11,398/sf, only 1.7% below the previous phase, outperforming the sector’s 5.3% price decline in the same period.
• Sharp declines in HIBOR have underpinned this stabilization, but a rebound may introduce volatility.

Actionable Insights and Sector Outlook

China Property Sector: Policy Watch and Stock Picks

• Maintained MARKET WEIGHT, citing weakening June fundamentals but expecting possible policy support after signals from Premier Li Qiang and Vice Premier He Lifeng.
• China Resources Land (CR Land, 1109 HK) remains the top pick, with Longfor (960 HK) recommended for higher upside potential if policy is announced.

Hong Kong Property Sector: Navigating HIBOR Risks

• Maintained MARKET WEIGHT on expectations of a mild rebound in HIBOR after HKMA’s recent intervention, which could test the recovery in home sales.
• Still anticipate lower average HIBOR in 2025 versus 2024, supported by potential US rate cuts and better local fundamentals.
• Sun Hung Kai Properties (SHKP, 16 HK) is the top pick for the Hong Kong sector.
• China property sector preferred over Hong Kong for short-term catalysts.

Detailed Company Analysis

China Resources Land (1109 HK)

• Recommendation: BUY
• Share Price: HK\$26.70
• Target Price: HK\$32.40 (21.3% upside)
• Market Cap: HK\$190.4bn
• PE 2026F/2027F: 6.9x/6.5x
• P/B 2026F/2027F: 0.5x/0.5x
• Yield 2026F/2027F: 5.4%/5.7%
• Strong fundamentals, sector leader, top pick for China property exposure.

Sunac China Holdings (1918 HK)

• Recommendation: SELL
• Share Price: HK\$1.44
• Target Price: HK\$1.06 (-26.4% downside)
• Market Cap: HK\$15.4bn
• PE: Not meaningful, no yield expected.
• Facing significant fundamental challenges and sector underperformance.

China Overseas Land (688 HK)

• Recommendation: BUY
• Share Price: HK\$13.68
• Target Price: HK\$16.67 (21.9% upside)
• Market Cap: HK\$149.7bn
• PE 2026F/2027F: 8.2x/7.5x
• P/B 2026F/2027F: 0.3x/0.3x
• Yield 2026F/2027F: 4.6%/5.0%
• Solid balance sheet and attractive valuation.

Longfor Properties (960 HK)

• Recommendation: BUY
• Share Price: HK\$9.53
• Target Price: HK\$11.58 (21.5% upside)
• Market Cap: HK\$66.6bn
• PE 2026F/2027F: 10.1x/8.9x
• P/B 2026F/2027F: 0.4x/0.4x
• Yield 2026F/2027F: 3.1%/3.5%
• High upside potential, especially if policy support is announced.

New World Development (17 HK)

• Recommendation: HOLD
• Share Price: HK\$5.71
• Target Price: HK\$4.03 (-29.4% downside)
• Market Cap: HK\$14.4bn
• PE 2026F/2027F: 11.1x/6.7x
• P/B 2026F/2027F: 0.1x/0.1x
• No dividend yield expected.
• Challenging outlook amid sector headwinds.

Sun Hung Kai Properties (16 HK)

• Recommendation: BUY
• Share Price: HK\$90.55
• Target Price: HK\$103.00 (13.7% upside)
• Market Cap: HK\$262.4bn
• PE 2026F/2027F: 10.4x/9.3x
• P/B 2026F/2027F: 0.4x/0.4x
• Yield 2026F/2027F: 4.4%/5.4%
• Sector bellwether, preferred Hong Kong property pick.

Kerry Properties (683 HK)

• Recommendation: BUY
• Share Price: HK\$20.45
• Target Price: HK\$22.70 (11.0% upside)
• Market Cap: HK\$29.7bn
• PE 2026F/2027F: 10.4x/6.4x
• P/B 2026F/2027F: 0.3x/0.3x
• Yield 2026F/2027F: 6.6%/6.6%
• Attractive dividend yield and valuation.

Conclusion: Key Takeaways for Investors

• China’s property sector is under pressure but may benefit from upcoming policy support; CR Land and Longfor are the top recommendations.
• Hong Kong’s property market shows signs of stabilization, but potential HIBOR volatility requires caution; SHKP is the preferred pick.
• Investors should monitor policy signals closely and consider sector leaders with resilient fundamentals and attractive upside.