Hong Kong developers are likely to report weak earnings this year and next despite recent stimulus measures, as the commercial market prepares for a supply glut and residents seek to splurge either on the mainland or overseas, according to ratings agency Moody’s.
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The forecast comes a week after Chief Executive John Lee Ka-chiu unveiled a more liberal mortgage-financing policy, which added to the optimism that was sparked by global central banks starting to raise interest rates.
“We expect aggregate [earnings before interest, taxes, depreciation and amortisation] to decrease by 5 per cent for full-year 2024 and remain at around the same level in 2025, compared with a 7 per cent fall in 2023,” the agency said in a report on Wednesday.
The report covered 11 property companies that Moody’s rates: Sun Hung Kai Properties (SHKP), CK Asset Holdings, Link Reit, Swire Properties, IFC Development, Wharf Reic, Hongkong Land, Wheelock, Hysan Development, Champion Reit and Nan Fung International Holdings.
In particular, the firm said, the office and retail property segments are likely to remain under pressure, although the residential market is expected to stabilise.
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“Persistent challenges, such as high supply and weak leasing demand in the office segment and reduced tourist and local shopping expenditure in the retail segment will continue to put pressure on profits,” Moody’s said.
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