Standard & Poor's Asian equity research is maintaining its 'accumulate'' recommendations on Cheung Kong (Holdings), Henderson Investment, Henderson Land Development and Sun Hung Kai Properties (SHKP), and 'hold'' recommendation on Hang Lung Properties. It says developers sense a turnaround in homebuyer confidence, which should form the basis for a sustainable recovery in residential prices. Retail rents should rise, though office rents could lag. Property stocks should sustain above-average valuations against net asset value in the early stages of a property recovery. SHKP and Hang Lung cite rising buyer confidence as the key driving factor behind the nascent recovery in Hong Kong's residential market. SHKP perceives a turnaround in confidence, driven by stronger support for Hong Kong and its economy by the Chinese government and a rethink of priorities by the Hong Kong government following the protest march in July, shifting its focus to economic growth and away from issues such the budget and national security. A key indication of confidence is the re-emergence of upgraders and property investors as well as a rise in transaction volumes in the secondary market. Both developers believed that still-abundant unsold inventory will limit price increases. S&P believe home prices will remain stable this year and recover by an undemanding 10 per cent per year from next year to 2006. SHKP believes that no more provisions will be required for its development portfolio. For this year the company set aside HK$1.22 billion in provisions. Of its projects due for completion next year, Yoho Town is 60 per cent sold (average price $2,150 per square foot), Ocean Shores Phase 3B is 45 per cent sold ($2,800 per sq ft), Vianni Cove is more than 90 per cent sold ($1,700 per sq ft), and Liberte is 90 per cent sold ($2,950 per sq ft). Hang Lung was launching Carmel-on-the-Hill last month while the Harbourside will be launched by the end of the year. Sales of all four of the company's residential projects will be stretched over two to three years to best capture recovering prices and, S&P believes, to allow it time to replenish its land bank. S&P expects Harbourside to sell at an average of $4,700, a justifiable premium to surrounding developments such as Wharf's Sorrento due to superior views. Hang Lung is positive on prospects for high-end rentals in Shanghai. Contributions from its Shanghai properties could grow by 20 to 25 per cent per year due to healthy turnover rent, positive rental reversions and the recognition over three years of its share of US$124 million in cash gains (to be split with Hang Lung Group) from the recent sale of an office tower in the Grand Gateway. On Friday Cheung Kong closed at $64.75; Henderson Investment at $8.90; Henderson Land Development $32.60; SHKP $65.75; and Hang Lung $10.15.