Key Takeaways:
(P1) Goldman Sachs boosted its forecast for Hong Kong’s residential property market, now expecting prices to rise 15 percent this year on stronger-than-expected sales volume and a demand shift from leasing to purchasing.
(P2) "The bank continues to prefer property developers, which it believes will benefit from a multi-year upcycle in Hong Kong’s residential market," the Goldman Sachs research report said.
(P3) The revision comes as home prices have already climbed 8 percent year-to-date, fueled by a 48 percent surge in primary sales volume. The investment bank also lifted its 2026 forecast for core Central office rental growth to 10 percent from a previous 3 percent estimate, while slightly increasing its retail rent growth projection to 3 percent.
(P4) The bullish forecast suggests a turning point for a market that has faced headwinds from pandemic-related restrictions and economic uncertainty. The outlook hinges on continued demand and the performance of Hong Kong's broader economy, which saw a 5.9 percent expansion in the first quarter of 2026.
In its report, Goldman Sachs showed a clear preference for developers positioned to capitalize on the upswing. The bank raised its price target for Henderson Land (00012.HK) by 8 percent to HKD41 and placed it on its "Conviction List Buy." Sun Hung Kai Properties (00016.HK) also saw its target price lifted by 4 percent to HKD170.
Other developers with "Buy" ratings include Sino Land (00083.HK) and Swire Properties (01972.HK). The bank highlighted Sino Land's strong balance sheet and willingness to acquire land at trough prices. It also favors landlords with heavy exposure to the high-end Central district, like Hongkong Land (H78.SI) and Swire, which are set to benefit from the sharp upgrade in the core office rental forecast.
Conversely, the bank downgraded its target for New World Development (00017.HK) by 12 percent to HKD11, citing concerns over its net debt and cash flow. Wharf Holdings (00004.HK) was rated "Sell," with Goldman expressing concerns over its mainland China rental income and development property profits.
The upgraded forecast reflects a broader recovery narrative taking shape in Hong Kong, particularly at the high end. While residential rental growth has been a modest 1.2 percent year-to-date, the surge in primary sales suggests a rotation from renting to buying.
The office market tells a similar story of a bifurcated recovery. Goldman's significant 10 percent rental growth forecast for the core Central district stands in stark contrast to non-core districts, where vacancy rates remain elevated and rental forecasts are flat. This aligns with commentary from Hongkong Land's CEO, who, despite a broader diversification strategy, remains bullish on the company's prime Central portfolio, where vacancies were "falling rapidly."
This "K-shaped" recovery, where prime assets outperform, is a theme echoed across the region. A senior Goldman Sachs strategist recently noted the outperformance of North Asian markets, partly due to their insulation from energy shocks and strength in technology sectors, suggesting capital is flowing towards quality and stability.
This article is for informational purposes only and does not constitute investment advice.
