In a surprising turn of events, Goldman Sachs forecasts a bright future for Hong Kong's property market, with price increases on the horizon! Recent analysis shows that the one-month Hong Kong Interbank Offered Rate (HIBOR) has plummeted by approximately 280 basis points to just 1.2%, largely due to an overflow of liquidity in the banking sector.

This drop in HIBOR is a game-changer for the residential property market, as lower borrowing costs could significantly support property price growth. Analysts predict that the average one-month HIBOR will stabilize around 3.25% to 2.71% from 2025 to 2027.

As for the current market, there are around 28,000 unsold residential units available, and experts estimate it will take nearly 20 months to clear them. However, reaching a balanced mid-term inventory level is expected in just 10 months. Interestingly, Goldman Sachs has raised its property price forecasts for 2026-27, bumping expectations from +3%/+4% to an optimistic +5%/+6%!

Developer Ratings and Predictions

While earnings per share (EPS) estimates for 2025 remained unchanged for prominent Hong Kong developers, future forecasts for 2026-27 have seen an uplift of 2% and 6% respectively. SHK PPT and CK ASSET have both received a strong 'Buy' rating. Here's a breakdown of current recommendations:

- **SHK PPT (00016.HK)**: Current Price +0.950 (+1.174%). Target Price raised from HKD 86 to HKD 89.

- **CK ASSET (01113.HK)**: Current Price +0.150 (+0.458%). Target Price adjusted from HKD 45.7 to HKD 44.7.

In contrast, SINO LAND and KERRY PPT have been rated as 'Neutral,' while NEW WORLD DEV and HENDERSON LAND landed in the 'Sell' category.

What This Means for Investors

For investors keeping a keen eye on the property sector, these developments signify potential opportunities for lucrative returns. As the market stabilizes and borrowing costs decline, the stage is set for a robust rebound in property prices, making now a pivotal moment for strategic investments in Hong Kong!