Standard & Poor's Equity Research, a leading provider of independent equity research, has upgraded its recommendation on Hong Kong's property sector with interest rates possibly nearing its peak and secondary market transactions showing signs of recovery.

Standard & Poor's Associate Director of Equity Research, Tam Ching Wah, said, "The Hong Kong property market is probably at the mid-point of a climb."

He said the three sub-sectors, residential, office and retail, still have much room for improvement in terms of asset value and rental, and robust demand and limited supply over the next 2-3 years will boost prices and occupancy rates."

Standard & Poor's Equity Research believes that the U.S. Federal Reserve will make a last hike in May, with the Fed Funds Rate to then remain at 5 percent for the rest of the year. This peaking of U.S. interest rates should further lift sentiment for Hong Kong properties.

In response to the recent price cuts by several Hong Kong property developers, Mr. Tam said: "We think it is the right decision, because it should both revive activity in residential property transactions, and narrow the price gap between primary and secondary prices to a more sustainable level."

Standard & Poor's Equity Research expects to see another upward revision in the asking and transacted prices of residential properties once the price gap reaches the 15-20 percent level, and is upgrading the recommendation on the property sector from Marketweight to Overweight.

Source: Xinhua