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<Research>Citi Foresees HK Grade A Office Vacancy Rate 16% in 2025; Strict Control over Northern Metropolis Investment Needed
Recommend 6 Positive 10 Negative 6 |
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Citi Research issued a report analyzing the Hong Kong government’s fiscal budget unveiled yesterday (26th), which raised the property value threshold for a HK$100 stamp duty from HK$3 million to HK$4 million. Citi viewed this adjustment as supportive for end-user demand for studio or 1-bedroom units. Additionally, the government announced a suspension of commercial land launches. Citi noted that office vacancy rates will require time to digest, projecting a Grade A office vacancy rate of 16% in 2025 (up from 13.3% in 2024), influenced by persistent weak demand and an annual supply hike of 3%. The report also addressed the Northern Metropolis project, highlighting risks associated with large-scale capex and extended return periods. For property developers, Citi suggested that reclaiming land from major players such as SHK PPT (00016.HK) and HANG LUNG PPT (00101.HK) could reallocate resources to support public development. Alternatively, a partnership model, such as co-developing projects with NEW WORLD DEV (00017.HK), could share costs and enhance efficiency. However, given uncertainties in returns and potentially prolonged recovery timelines, Citi emphasized the need for stringent control over investment scale. Citi recommended property stocks with dividend or share buyback potential, including HENDERSON LAND (00012.HK), SINO LAND (00083.HK) and Hongkong Land. The broker also highlighted CK ASSET (01113.HK), noting that its significant non-Hong Kong and non-mainland China business exposure (favoring international diversification) could deliver positive earnings surprises, cushioning pressures from the local market. AAStocks Financial News |
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