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Hang Seng Index
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Hong Kong property stocks enjoy value revival as they hitch ride on economic rebound with foreign funds on the prowl

  • The Hang Seng property index has returned 12.8 per cent this year, outperforming the local market’s blue-chip benchmark
  • Analysts are bullish on the prospects of developers with shopping malls in their portfolio as latest e-voucher scheme seen propelling retail sales

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Potential homebuyers line up at New World Development’s sales office in Tsuen Wan to buy flats at The Pavilia Farm. Photo: Jonathan Wong
Martin Choi
Hong Kong property stocks are enjoying a value revival as investors pay the highest price for their underlying assets in more than a decade. Strong response to new residential projects, more spending vouchers, and a return of foreign funds could fuel that momentum.
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The price-to-book ratio of Hang Seng Property Index members has risen to 1.8 times this year, according to data compiled by Bloomberg, a level not seen since they averaged two times in 2009. In pandemic-stricken 2020, they slumped to a four-year low of 0.7 times.

Analysts at DBS Bank and Goldman Sachs are upbeat about the market outlook, saying efforts to revive consumption will translate into higher stock prices. The Blackstone Group’s HK$23.7 billion (US$3.05 billion) bid for Soho China also signalled cash-laden funds are on the prowl for bargains.

“The property market remains strong with large amounts of liquidity chasing assets like real estate,” said Raymond Cheng, head of Hong Kong and China research at CGS-CIMB Securities. “There is still room for Hong Kong property stocks [to appreciate], particularly for developers with a large presence in the residential sector.”

Hong Kong’s economy is on the mend, recovering from several quarters of recession brought on by the social unrest and the pandemic. The city’s economy expanded by 7.9 per cent in the first quarter, the most in 11 years, while new home sales are rising at the fastest pace in two years.

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