Key Takeaways:
A surprisingly resilient Hong Kong property market has prompted one of Wall Street’s biggest banks to significantly upgrade its forecasts for the second time this year.
Goldman Sachs has boosted its forecast for Hong Kong residential property prices, now expecting a 15 percent increase in 2026, citing stronger-than-expected sales volume and a stabilizing economy that is drawing investors back to the region. The new projection is an increase from a 12 percent forecast made earlier in the year.
"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 report noted, signaling renewed confidence in a sector that has been under pressure.
The bullish revision is supported by a strong start to the year. Residential prices have already climbed 8 percent year-to-date, while primary sales transaction volumes have surged 48 percent. The report comes as the broader Chinese economy shows signs of stabilization after a multi-year property slump, with foreign direct investment returning to positive territory and global equity funds increasing their allocations to Chinese assets, according to data from EPFR and China's State Administration of Foreign Exchange.
This matters because it signals a potential bottom for the property slump that has weighed on the Hong Kong and broader Chinese economy. With foreign direct investment recovering and global funds increasing allocations, the upgraded forecast could fuel a virtuous cycle of rising asset prices and improved investor confidence.
The recovery is not uniform across all property types. While the residential market is heating up, the commercial sector presents a more mixed picture. Goldman raised its 2026 office rental growth forecast from flat to 3 percent, but this is driven almost entirely by the core Central district, where the rental growth forecast was significantly revised from 3 percent to 10 percent.
Non-core districts are expected to remain flat, with the report citing still-elevated vacancy rates. The retail segment saw a slight upward adjustment in rental growth from 2 percent to 3 percent, led by a recovery in the luxury segment.
In light of its revised market view, Goldman Sachs adjusted its ratings on several key Hong Kong property stocks. The bank reiterated its preference for developers with large pipelines of properties to sell into the upcycle.
The price target for Henderson Land (00012.HK) was raised by 8 percent to HKD41, and SHK Properties (00016.HK) saw its target lifted 4 percent to HKD170, with both retaining "Buy" ratings. Sino Land (00083.HK) and Swire Properties (01972.HK) also received target price increases.
However, the bank expressed caution on companies with weaker balance sheets or exposure to more volatile mainland markets. New World Development (00017.HK) had its price target cut by 12 percent to HKD11, with Goldman citing its latest assessment of the company's net debt and cash flow. Wharf Holdings (00004.HK) was rated "Sell," reflecting concerns over its mainland rental income and development property profits.
This article is for informational purposes only and does not constitute investment advice.
