Sino Land, CK Property and Sun Hung Kai still top Hong Kong property picks

Major Hong Kong property developers such as Cheung Kong Property Holdings, Sino Land and Sun Hung Kai Properties will not be dislodged from their roost over the city's property sector because they have an extensive line up of luxury projects and the rise in US interest rates will barely affect them, a report by BNP Paribas said.

The French lender said these developers were not worried about US interest rates rising because the buyers of their luxury properties usually do not take out mortgages to finance purchases of luxury flats and mansions.

"We expect luxury residential price growth to outperform that of the mass market in the next 12 to 18 months. This will favour developers with higher exposure to the luxury segment," the report said.

Such expectation is partly backed by historical market trends showing that luxury residential rents often move hand in hand with Central grade-A office rents, which are currently rising, primarily because of high demand from mainland companies that are expanding to Hong Kong.

"Sino Land remains our top pick, given its luxury exposure and net cash position with limited impact from a potential interest rate rise in the second half of 2015," the report said. Besides, the company has little exposure to the yuan's depreciation since its China business will contribute less than 10 per cent to its future earnings.

On the possibility of a US rate rise, which may now be delayed due to global market turmoil, analysts said it could be partly offset by the recent interest rate cuts made by the People's Bank of China that may encourage more mainlanders to get their feet wet in Hong Kong's luxury housing sector.