Hong Kong's residential market has fallen for 7 consecutive years, with property prices having retreated by almost 30% from their all-time peak in August 2021 (first reached in July 2018), according to Morgan Stanley's research report.

While it may still be early, the broker was optimistic that it may be at the beginning of an upcycle that could last 4-5 years. Reasons for this include the fact that the CCL has lagged behind the HSI and is likely to catch up; wage growth helped to bring affordability back up to 2010 levels; structural benefits such as low land supply and the abolition of the Special Stamp Duty (SSD); and low interest rates. Property prices are also expected to rise 2% in 2H25.

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In terms of stock picks, Morgan Stanley preferred SHK PPT (00016.HK)  +0.650 (+0.735%)    Short selling $23.55M; Ratio 14.732%   , HENDERSON LAND (00012.HK)  +0.050 (+0.182%)    Short selling $33.54M; Ratio 46.585%   and KERRY PPT (00683.HK)  +0.160 (+0.836%)    Short selling $4.37M; Ratio 10.650%   , which are the main beneficiaries of the HIBOR cuts and have ample saleable resources.

Of which, the broker upgraded HENDERSON LAND to Overweight from Equalweight, and downgraded SINO LAND (00083.HK)  -0.010 (-0.121%)    Short selling $4.91M; Ratio 22.773%   to Equalweight from Overweight. The latest ratings and target prices of the sector are listed in a separate table.

Morgan Stanley remained cautious on NEW WORLD DEV (00017.HK)  +0.160 (+3.059%)    Short selling $4.00M; Ratio 5.574%   and WHARF HOLDINGS (00004.HK)  0.000 (0.000%)    Short selling $3.39M; Ratio 33.622%   , as the former has tight liquidity and rising PCS coupon and the latter has unattractive valuation and low dividend yield of 1.7%.
(HK stocks quote is delayed for at least 15 mins.Short Selling Data as at 2025-06-24 12:25.)

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