UOB Kay Hian
Date of Report: 18 September 2025
Hong Kong Property Outlook 2025: Residential Recovery Ahead, Landlord Prospects Mixed, Top Stock Picks Revealed
Introduction: Hong Kong Property Market at a Crossroads
The 2025 Policy Address by Chief Executive John Lee introduces pivotal changes to Hong Kong’s property sector, with a strong positive tilt for the residential market and a neutral stance for landlords in the retail and office segments. UOB Kay Hian’s latest analysis provides a comprehensive breakdown of these policy impacts and offers stock recommendations and sector insights for investors navigating this dynamic landscape.
Policy Address 2025: Key Takeaways Impacting Property Markets
- New Capital Investment Entrant Scheme (CIES) Expansion: Now includes residential properties valued HK\$30m-50m, set to spur high-end residential sales.
- Moderated Land Supply Targets: 10-year private housing supply goal reduced, with the Kau Yi Chau artificial island project suspended, placing focus on the North Metropolis for future growth.
- Demographic and Tourism Initiatives: Emphasis on attracting a younger population and boosting tourism, but no direct retail stimulus (e.g., consumption vouchers).
- Market View: UOB Kay Hian maintains MARKET WEIGHT for both Hong Kong developers and landlords, with updated stock ratings and target prices.
New Capital Investment Entrant Scheme: Boosting Residential Sales
The expansion of CIES now permits:
- Non-residential property investments up to HK\$15m (previously HK\$10m).
- Residential property investments from HK\$30m upwards (previously HK\$50m minimum).
This policy adjustment is expected to revive transactions in the HK\$30m-50m segment, which had previously underperformed.
| Property Segment |
1H24 Units |
1H24 Value (HK\$m) |
2H24 Units |
2H24 Value (HK\$m) |
1H25 Units |
1H25 Value (HK\$m) |
YoY Unit Change |
YoY Value Change |
HoH Unit Change |
HoH Value Change |
| Primary (>HK\$50m) |
223 |
23,535 |
243 |
33,093 |
292 |
32,254 |
30.9% |
37.0% |
20.2% |
-2.5% |
| Secondary (>HK\$50m) |
83 |
9,989 |
102 |
9,985 |
135 |
15,688 |
62.7% |
57.1% |
32.4% |
57.1% |
| Primary (HK\$30m-50m) |
254 |
9,760 |
243 |
9,197 |
169 |
6,392 |
-33.5% |
-34.5% |
-30.5% |
-30.5% |
| Secondary (HK\$30m-50m) |
195 |
7,374 |
157 |
5,932 |
187 |
7,155 |
-4.1% |
-3.0% |
19.1% |
20.6% |
Land Supply and Major Development Initiatives
- Private Housing Supply: The decade-long target is now 126,000 units, down from 132,000 units previously. In FY24/25, land supply dropped 36% YoY to 8,930 units, achieving just 68% of the annual target.
- Kau Yi Chau Artificial Island Project: Suspended, removing a planned 1,000 ha of new land (14% of total new supply for 2019-48) and shifting the development spotlight to the North Metropolis (planned 3,000 ha for 2019-48).
- North Metropolis Acceleration: New measures include:
- Potential shift to an industry-linked “two-envelope” tendering approach.
- Landowners may surrender land to offset in-situ land exchange payment.
- “Pay-for-what-you-build” model for land premiums, based on actual built GFA rather than maximum planned GFA.
Population Policies and Tourism: Building a Younger, Growing Hong Kong
- Demographics: Tax allowance for children extended from one to two years. Enrolment ceiling for non-local students in government-funded post-secondary institutions raised from 40% to 50%.
- Population Trends: Hong Kong’s population grew by 0.1% YoY to 7.53 million in 2024, surpassing the 2019 pre-pandemic peak. Newborns rose by 11% YoY, signalling recent policy success.
- Tourism: 8M25 tourist arrivals rose 12% YoY, with further growth expected in 2026 via targeted government initiatives (yacht, mega-event, cruise, and eco-tourism). No new local consumption stimulus announced.
Valuation, Sector Ratings, and Stock Recommendations
UOB Kay Hian maintains MARKET WEIGHT on both Hong Kong developers and landlords. The policy tone supports the residential market through demand-side boosts and moderated supply, but retail and office landlords’ recovery remains reliant on broader economic and tourism trends.
Sector Preference Order:
- Residential Developers
- Retail Landlords
- Office Landlords
Top Picks and Peer Comparison
| Company |
Ticker |
Recommendation |
Share Price (HK\$) |
Target Price (HK\$) |
Upside (%) |
2025E PE (x) |
2025E Yield (%) |
2025E ROE (%) |
Market Cap (S\$m) |
Price/NAV (x) |
| Sun Hung Kai Properties (SHKP) |
16 HK |
BUY |
96.20 |
106.90 |
11.1 |
12.1 |
3.9 |
3.6 |
278,766.5 |
0.4 |
| Hysan Development |
14 HK |
BUY |
16.27 |
17.84 |
9.6 |
10.4 |
6.9 |
3.2 |
16,709.4 |
0.3 |
| New World Development (NWD) |
17 HK |
SELL |
8.25 |
6.90 |
-16.4 |
16.0 |
0.0 |
-2.5 |
20,762.2 |
0.1 |
| Kerry Properties |
683 HK |
HOLD |
21.98 |
22.80 |
3.7 |
14.9 |
6.1 |
1.8 |
31,899.7 |
0.3 |
| Wharf REIC |
1997 HK |
BUY |
23.64 |
28.50 |
20.6 |
11.4 |
5.6 |
3.2 |
71,776.4 |
0.4 |
| Link REIT |
823 HK |
BUY |
41.54 |
48.48 |
16.7 |
15.5 |
6.4 |
4.5 |
107,272.7 |
0.7 |
Company-by-Company Analysis and Target Price Changes
Sun Hung Kai Properties (SHKP)
- Recommendation: BUY (Top Pick for HK Developers)
- Target Price Raised: HK\$106.9 (from HK\$103.00)
- Victoria Harbour project to benefit from new CIES expansion.
- NAV discount lowered from 42% to 40% on improved sales outlook.
Hysan Development
- Recommendation: BUY (Changed to Top Pick among landlords)
- Target Price: HK\$17.84
- Benefits from supportive tourism policies and CIES-driven demand at Bamboo Groove.
New World Development (NWD)
- Recommendation: Downgraded to SELL (previously not specified)
- Target Price Raised: HK\$6.90 (from HK\$4.03)
- NAV discount revised to 75% on improved financing, but current valuation deemed rich with positives priced in.
Kerry Properties
- Recommendation: HOLD
- Target Price Raised: HK\$22.80 (from HK\$21.40)
- La Montagne project expected to benefit from CIES expansion; NAV discount narrowed from 69% to 67%.
Link REIT & Wharf REIC
- Both Maintained at BUY
- Link REIT: Target Price HK\$48.48
- Wharf REIC: Target Price HK\$28.50
- Recovery reliant on economic and tourism improvement rather than direct policy support.
Market Risks and Catalysts
- Potential sector catalyst: faster-than-expected US interest rate cuts.
- Landlords’ recovery depends on macroeconomic and tourism trends rather than direct policy action.
Conclusion: Navigating the Hong Kong Property Market in 2025
The 2025 Policy Address delivers a moderate yet targeted boost to Hong Kong’s residential property sector, leveraging investment-friendly policies and supply moderation. While developers stand to gain, landlords—especially in office and retail—must rely on broader economic recovery. Investors are advised to prioritize residential developers, with SHKP and Hysan standing out as sector leaders.
Stay tuned for further updates as policy implementation unfolds and market dynamics evolve in one of Asia’s most closely watched real estate markets.
