Jefferies released a research report saying that in Hong Kong real estate, they are still optimistic about good manufacturers rather than owners. The bank believes that the market may undervalue the housing market due to strong sales during the recent accelerated launch of real estate projects. Sun Hung Kai Properties (00016) continues to be the bank's preferred stock with its rich project reserves, high-quality products and resilient profit margins.
The report points out that recent reports have consolidated the bank's view on the property market, that is, it favors housing, retail over office buildings, and that it favors more manufacturers than owners. The bank said that Swire Properties' (01972) operating index for the first quarter of 2024 was lower than market expectations, reflecting the continued decline in the renewal of the company's office buildings and the resistance faced by the retail industry in Hong Kong and the mainland. As outbound travel increased and tourist spending declined, retail sales in Hong Kong fell by 7% in March, which is surprising. Furthermore, based on the number of inbound and outbound visitors, the bank predicts a 1% drop in retail sales for the 2024 fiscal year, and it is expected that retail sales will not be corrected until July.