Broker: UOB Kay Hian
Date of Report: 29 July 2025

China and Hong Kong Property Markets 2025: In-depth Analysis, Top Picks, and Sector Outlook

The China and Hong Kong property sectors are at a pivotal moment, with diverging dynamics across mainland and Hong Kong markets. This comprehensive analysis shines a spotlight on sector trends, peer comparisons, and top stock picks for investors navigating these evolving markets.

Executive Summary: Key Sector Calls and Investment Strategy

• China Property: Market Weight – Weakening sales and land revenues, but potential policy support in 2H25 offers catalysts.
• Hong Kong Property: Overweight – Destocking progress and stabilizing prices support an optimistic outlook.
• Property Management: Underweight – Industry lacks catalysts, but selective opportunities remain.
• Top Picks: CR Land (1109 HK), Sun Hung Kai Properties (16 HK), CR Mixc Lifestyle (1209 HK).

Peer Comparison: Financial Snapshot of Leading Property Companies

China Property Market: Sales Decline, Land Revenue Under Pressure

The mainland market continued to weaken in July. High-frequency data showed further declines in both new and secondary home sales:

• New home sales (by GFA) in 28 monitored cities saw a 25.7% month-on-month and 11.8% year-on-year drop for July (first 27 days).
• Tier 1 and Tier 2 cities saw new home sales fall 26.1% and 28.4% month-on-month, and 29.2% and 17.3% year-on-year, respectively.
• Key cities with sharp declines included Beijing, Shanghai, Shenzhen, Suzhou, Chengdu, and Foshan.
• Second-hand home sales (by units) in three Tier 1 cities and nine Tier 2 cities dropped 10% and 7.2% month-on-month, and 9.2% and 10% year-on-year, respectively.
• Local governments’ land sales revenue in 1H25 was RMB 1,427.1 billion, down 6.5% year-on-year, mirroring a 5.5% drop in national property sales.
• June 2025 saw a temporary rebound in land sales revenue (+21.9% year-on-year), but ongoing weakness in property sales is expected to weigh on future land revenue.

New Home Sales by City (GFA, ‘000 sqm)

Sector Outlook and Ratings

• China Property: Market Weight
• Hong Kong Property: Overweight
• Property Management: Underweight

Hong Kong Property Market: Destocking Progress and Stabilizing Prices

• The Centaline City Leading (CCL) index is up 0.1% year-to-date, having fully recovered 2025 losses.
• CCL index rose 0.97% week-on-week (largest in 16 weeks), standing at 137.76 as of 25 July.
• The Centa Valuation Index (CVI) at 58.22 has stayed above the neutral 40-point level for 10 consecutive weeks, reflecting positive sentiment from banks.
• Inventory of private residential units fell to 101,000 at end-June 2025, down 3.8% quarter-on-quarter and 7.3% year-on-year, 9.8% below the March 2024 peak.
• 1M HIBOR rose to an average of 0.9987% in July, up from 0.6838% in June, reaching 1.02% by 28 July. Mortgage rates are now at 2.32%.
• Rental yields in May 2025: Class A 3.7%, Class B 3.2%, Class C 2.8%, Class D 2.6%, Class E 2.4%. Rental yield of Class A units is 1.4% above mortgage rate, supporting investor sentiment.

Detailed Company Analysis

China Resources Land (1109 HK) – Top Pick for Resilience

• Rating: BUY
• Share Price: HK\$30.20
• Target Price: HK\$32.42
• Upside: 7.4%
• Market Cap: HK\$215,354.4 million
• PE 2026F/2027F: 7.7x / 7.3x
• P/B 2026F/2027F: 0.6x / 0.5x
• Yield 2026F/2027F: 4.8% / 5.1%
• CR Land is highlighted for its resilient financial performance in 1H25, with an expected core net profit drop of only around 5% year-on-year. Its attractive dividend yield and stability among SOE developers make it a preferred choice.

Sunac China Holdings (1918 HK)

• Rating: SELL
• Share Price: HK\$1.71
• Target Price: HK\$1.06
• Upside: -38.0%
• Market Cap: HK\$19,613.4 million
• PE: Not meaningful (nm) for 2026/2027
• P/B 2026F/2027F: 0.5x / 0.0x
• Yield 2026F/2027F: 0.0% / 0.0%
• Sunac is under significant pressure, with no dividend yield and negative earnings outlook.

China Overseas Land (688 HK)

• Rating: BUY
• Share Price: HK\$14.40
• Target Price: HK\$16.67
• Upside: 15.8%
• Market Cap: HK\$157,606.3 million
• PE 2026F/2027F: 8.5x / 7.8x
• P/B 2026F/2027F: 0.3x / 0.3x
• Yield 2026F/2027F: 4.4% / 4.8%

Longfor Properties (960 HK)

• Rating: BUY
• Share Price: HK\$10.50
• Target Price: HK\$11.18
• Upside: 6.5%
• Market Cap: HK\$73,365.4 million
• PE 2026F/2027F: 20.0x / 12.4x
• P/B 2026F/2027F: 0.4x / 0.4x
• Yield 2026F/2027F: 1.6% / 2.5%

CR Mixc Lifestyle (1209 HK) – Top Pick for Yield and Growth

• Rating: BUY
• Share Price: HK\$38.30
• Target Price: HK\$42.90
• Upside: 12.0%
• Market Cap: HK\$87,419.8 million
• PE 2026F/2027F: 17.0x / 15.2x
• P/B 2026F/2027F: 4.7x / 4.6x
• Yield 2026F/2027F: 5.9% / 6.6%
• CR Mixc stands out for its solid earnings trajectory and sector-leading dividend yield, making it the preferred pick in the property management space.

China Overseas Property Holdings (2669 HK)

• Rating: BUY
• Share Price: HK\$5.69
• Target Price: HK\$7.35
• Upside: 29.2%
• Market Cap: HK\$18,685.7 million
• PE 2026F/2027F: 10.0x / 9.6x
• P/B 2026F/2027F: 2.3x / 2.0x
• Yield 2026F/2027F: 3.7% / 3.9%

Poly Property Development (6049 HK)

• Rating: BUY
• Share Price: HK\$36.05
• Target Price: HK\$42.60
• Upside: 18.2%
• Market Cap: HK\$19,947.7 million
• PE 2026F/2027F: 11.3x / 10.9x
• P/B 2026F/2027F: 1.6x / 1.5x
• Yield 2026F/2027F: 4.5% / 4.6%

Country Garden Services (6098 HK)

• Rating: HOLD
• Share Price: HK\$7.10
• Target Price: HK\$5.74
• Upside: -19.2%
• Market Cap: HK\$23,738.0 million
• PE 2026F/2027F: 7.9x / 8.4x
• P/B 2026F/2027F: 0.6x / 0.6x
• Yield 2026F/2027F: 3.9% / 3.6%

New World Development (17 HK)

• Rating: HOLD
• Share Price: HK\$6.34
• Target Price: HK\$4.03
• Upside: -36.4%
• Market Cap: HK\$15,955.5 million
• PE 2026F/2027F: 12.3x / 7.4x
• P/B 2026F/2027F: 0.1x / 0.1x
• Yield 2026F/2027F: 0.0% / 0.0%

Sun Hung Kai Properties (16 HK) – Top Hong Kong Developer Pick

• Rating: BUY
• Share Price: HK\$94.00
• Target Price: HK\$103.14
• Upside: 9.7%
• Market Cap: HK\$272,391.3 million
• PE 2026F/2027F: 10.7x / 9.7x
• P/B 2026F/2027F: 0.4x / 0.4x
• Yield 2026F/2027F: 4.2% / 5.2%
• Backed by a strong, diversified landbank and healthy liquidity, SHKP is best placed among Hong Kong developers amid active destocking and margin pressures in the sector.

Kerry Properties (683 HK)

• Rating: BUY
• Share Price: HK\$20.95
• Target Price: HK\$22.70
• Upside: 8.4%
• Market Cap: HK\$30,404.9 million
• PE 2026F/2027F: 10.7x / 6.6x
• P/B 2026F/2027F: 0.3x / 0.3x
• Yield 2026F/2027F: 6.4% / 6.4%

2025 Sector Outlook and Investment Themes

• Expect stable to slightly rising mortgage rates in Hong Kong, supporting rental yields above mortgage rates for key segments.
• Continued destocking in Hong Kong, with inventory at multi-year lows, and a flat price outlook for 2025.
• Weakness in China’s primary and secondary sales, with further downside risk to land revenue.
• Property management sector lacks broad-based growth catalysts, but strong names (notably CR Mixc) offer resilient yields and earnings.

Conclusion: Navigating 2025 with Focus on Quality and Yield

Investors should maintain a selective approach, focusing on companies with resilient earnings, strong balance sheets, and attractive yields. CR Land, Sun Hung Kai Properties, and CR Mixc Lifestyle are the standout picks for navigating the complex and shifting landscape of China and Hong Kong real estate in 2025.